Correlation Between Liontrust Asset and Solstad Offshore

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Can any of the company-specific risk be diversified away by investing in both Liontrust Asset 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 Liontrust Asset and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liontrust Asset Management and Solstad Offshore ASA, you can compare the effects of market volatilities on Liontrust Asset 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 Liontrust Asset with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liontrust Asset and Solstad Offshore.

Diversification Opportunities for Liontrust Asset and Solstad Offshore

0.49
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Liontrust and Solstad is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Liontrust Asset Management 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 Liontrust Asset 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 Liontrust Asset Management 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 Liontrust Asset i.e., Liontrust Asset and Solstad Offshore go up and down completely randomly.

Pair Corralation between Liontrust Asset and Solstad Offshore

Assuming the 90 days trading horizon Liontrust Asset is expected to generate 22.56 times less return on investment than Solstad Offshore. But when comparing it to its historical volatility, Liontrust Asset Management is 1.57 times less risky than Solstad Offshore. It trades about 0.02 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  3,190  in Solstad Offshore ASA on August 30, 2024 and sell it today you would earn a total of  1,110  from holding Solstad Offshore ASA or generate 34.8% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Liontrust Asset Management  vs.  Solstad Offshore ASA

 Performance 
       Timeline  
Liontrust Asset Mana 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Liontrust Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Solstad Offshore ASA 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Solstad Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

Liontrust Asset and Solstad Offshore Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Liontrust Asset and Solstad Offshore

The main advantage of trading using opposite Liontrust Asset and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liontrust Asset 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.
The idea behind Liontrust Asset Management and Solstad Offshore ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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