Correlation Between InterContinental and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both InterContinental 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 InterContinental and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InterContinental Hotels Group and Solstad Offshore ASA, you can compare the effects of market volatilities on InterContinental 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 InterContinental with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of InterContinental and Solstad Offshore.
Diversification Opportunities for InterContinental and Solstad Offshore
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between InterContinental and Solstad is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding InterContinental Hotels Group 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 InterContinental 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 InterContinental Hotels Group 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 InterContinental i.e., InterContinental and Solstad Offshore go up and down completely randomly.
Pair Corralation between InterContinental and Solstad Offshore
Assuming the 90 days trading horizon InterContinental Hotels Group is expected to generate 0.3 times more return on investment than Solstad Offshore. However, InterContinental Hotels Group is 3.38 times less risky than Solstad Offshore. It trades about 0.37 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.06 per unit of risk. If you would invest 749,480 in InterContinental Hotels Group on August 28, 2024 and sell it today you would earn a total of 230,520 from holding InterContinental Hotels Group or generate 30.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
InterContinental Hotels Group vs. Solstad Offshore ASA
Performance |
| Timeline |
| InterContinental Hotels |
| Solstad Offshore ASA |
InterContinental and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InterContinental and Solstad Offshore
The main advantage of trading using opposite InterContinental and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InterContinental 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.| InterContinental vs. Chocoladefabriken Lindt Spruengli | InterContinental vs. National Atomic Co | InterContinental vs. OTP Bank Nyrt | InterContinental vs. Samsung Electronics Co |
| Solstad Offshore vs. Samsung Electronics Co | Solstad Offshore vs. Samsung Electronics Co | Solstad Offshore vs. Hyundai Motor | Solstad Offshore vs. Toyota Motor Corp |
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 Stocks Directory module to find actively traded stocks across global markets.
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