Correlation Between Capital Metals and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both Capital Metals and Solstad Offshore at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Capital Metals and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Metals PLC and Solstad Offshore ASA, you can compare the effects of market volatilities on Capital Metals and Solstad Offshore and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Capital Metals with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Solstad Offshore.
Diversification Opportunities for Capital Metals and Solstad Offshore
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Capital and Solstad is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA and Capital Metals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Capital Metals PLC are associated (or correlated) with Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Capital Metals i.e., Capital Metals and Solstad Offshore go up and down completely randomly.
Pair Corralation between Capital Metals and Solstad Offshore
Assuming the 90 days trading horizon Capital Metals PLC is expected to under-perform the Solstad Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Capital Metals PLC is 1.06 times less risky than Solstad Offshore. The stock trades about -0.21 of its potential returns per unit of risk. The Solstad Offshore ASA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,990 in Solstad Offshore ASA on November 3, 2024 and sell it today you would earn a total of 50.00 from holding Solstad Offshore ASA or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Metals PLC vs. Solstad Offshore ASA
Performance |
| Timeline |
| Capital Metals PLC |
| Solstad Offshore ASA |
Capital Metals and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Metals and Solstad Offshore
The main advantage of trading using opposite Capital Metals and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals position performs unexpectedly, Solstad Offshore can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Solstad Offshore will offset losses from the drop in Solstad Offshore's long position.| Capital Metals vs. Lowland Investment Co | Capital Metals vs. Seraphim Space Investment | Capital Metals vs. Vietnam Enterprise Investments | Capital Metals vs. New Residential Investment |
| Solstad Offshore vs. Zegona Communications Plc | Solstad Offshore vs. Universal Display Corp | Solstad Offshore vs. Summit Materials Cl | Solstad Offshore vs. Darden Restaurants |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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