Correlation Between PPHE Hotel and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both PPHE 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 PPHE 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 PPHE Hotel Group and Solstad Offshore ASA, you can compare the effects of market volatilities on PPHE 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 PPHE Hotel with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of PPHE Hotel and Solstad Offshore.
Diversification Opportunities for PPHE Hotel and Solstad Offshore
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PPHE and Solstad is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PPHE 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 PPHE 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 PPHE 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 PPHE Hotel i.e., PPHE Hotel and Solstad Offshore go up and down completely randomly.
Pair Corralation between PPHE Hotel and Solstad Offshore
Assuming the 90 days trading horizon PPHE Hotel is expected to generate 7.29 times less return on investment than Solstad Offshore. But when comparing it to its historical volatility, PPHE Hotel Group is 2.29 times less risky than Solstad Offshore. It trades about 0.01 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,010 in Solstad Offshore ASA on August 28, 2024 and sell it today you would earn a total of 1,188 from holding Solstad Offshore ASA or generate 39.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.0% |
| Values | Daily Returns |
PPHE Hotel Group vs. Solstad Offshore ASA
Performance |
| Timeline |
| PPHE Hotel Group |
| Solstad Offshore ASA |
PPHE Hotel and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PPHE Hotel and Solstad Offshore
The main advantage of trading using opposite PPHE Hotel and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PPHE 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.| PPHE Hotel vs. Chocoladefabriken Lindt Spruengli | PPHE Hotel vs. National Atomic Co | PPHE Hotel vs. OTP Bank Nyrt | PPHE Hotel 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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