Correlation Between NH HOTEL and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both NH HOTEL 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 NH HOTEL and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NH HOTEL GROUP and Solstad Offshore ASA, you can compare the effects of market volatilities on NH HOTEL 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 NH HOTEL with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH HOTEL and Solstad Offshore.
Diversification Opportunities for NH HOTEL and Solstad Offshore
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NH5 and Solstad is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding NH HOTEL 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 NH HOTEL 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 NH HOTEL 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 NH HOTEL i.e., NH HOTEL and Solstad Offshore go up and down completely randomly.
Pair Corralation between NH HOTEL and Solstad Offshore
Assuming the 90 days trading horizon NH HOTEL GROUP is expected to generate 0.83 times more return on investment than Solstad Offshore. However, NH HOTEL GROUP is 1.2 times less risky than Solstad Offshore. It trades about 0.05 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.01 per unit of risk. If you would invest 335.00 in NH HOTEL GROUP on October 13, 2024 and sell it today you would earn a total of 289.00 from holding NH HOTEL GROUP or generate 86.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NH HOTEL GROUP vs. Solstad Offshore ASA
Performance |
| Timeline |
| NH HOTEL GROUP |
| Solstad Offshore ASA |
NH HOTEL and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NH HOTEL and Solstad Offshore
The main advantage of trading using opposite NH HOTEL and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH HOTEL 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.| NH HOTEL vs. Japan Asia Investment | NH HOTEL vs. SK TELECOM TDADR | NH HOTEL vs. ECHO INVESTMENT ZY | NH HOTEL vs. CITIC Telecom International |
| Solstad Offshore vs. BII Railway Transportation | Solstad Offshore vs. ANTA SPORTS PRODUCT | Solstad Offshore vs. InterContinental Hotels Group | Solstad Offshore vs. NH HOTEL GROUP |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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