Correlation Between Prosafe SE and Solstad Offsho
Can any of the company-specific risk be diversified away by investing in both Prosafe SE and Solstad Offsho 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 Prosafe SE and Solstad Offsho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosafe SE and Solstad Offsho, you can compare the effects of market volatilities on Prosafe SE and Solstad Offsho 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 Prosafe SE with a short position of Solstad Offsho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and Solstad Offsho.
Diversification Opportunities for Prosafe SE and Solstad Offsho
-0.84 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Prosafe and Solstad is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and Solstad Offsho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offsho and Prosafe SE 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 Prosafe SE are associated (or correlated) with Solstad Offsho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offsho has no effect on the direction of Prosafe SE i.e., Prosafe SE and Solstad Offsho go up and down completely randomly.
Pair Corralation between Prosafe SE and Solstad Offsho
Assuming the 90 days trading horizon Prosafe SE is expected to under-perform the Solstad Offsho. In addition to that, Prosafe SE is 1.38 times more volatile than Solstad Offsho. It trades about -0.09 of its total potential returns per unit of risk. Solstad Offsho is currently generating about 0.01 per unit of volatility. If you would invest 4,670 in Solstad Offsho on November 2, 2024 and sell it today you would lose (630.00) from holding Solstad Offsho or give up 13.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosafe SE vs. Solstad Offsho
Performance |
| Timeline |
| Prosafe SE |
| Solstad Offsho |
Prosafe SE and Solstad Offsho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosafe SE and Solstad Offsho
The main advantage of trading using opposite Prosafe SE and Solstad Offsho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE position performs unexpectedly, Solstad Offsho 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 Offsho will offset losses from the drop in Solstad Offsho's long position.The idea behind Prosafe SE and Solstad Offsho 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.| Solstad Offsho vs. Havila Shipping ASA | Solstad Offsho vs. Prosafe SE | Solstad Offsho vs. Eidesvik Offshore ASA |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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