Correlation Between SD Standard and Pexip Holding
Can any of the company-specific risk be diversified away by investing in both SD Standard and Pexip Holding 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 SD Standard and Pexip Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SD Standard Drilling and Pexip Holding ASA, you can compare the effects of market volatilities on SD Standard and Pexip Holding 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 SD Standard with a short position of Pexip Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and Pexip Holding.
Diversification Opportunities for SD Standard and Pexip Holding
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SDSD and Pexip is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and Pexip Holding ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pexip Holding ASA and SD Standard 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 SD Standard Drilling are associated (or correlated) with Pexip Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pexip Holding ASA has no effect on the direction of SD Standard i.e., SD Standard and Pexip Holding go up and down completely randomly.
Pair Corralation between SD Standard and Pexip Holding
Assuming the 90 days trading horizon SD Standard is expected to generate 9.61 times less return on investment than Pexip Holding. But when comparing it to its historical volatility, SD Standard Drilling is 3.75 times less risky than Pexip Holding. It trades about 0.05 of its potential returns per unit of risk. Pexip Holding ASA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,275 in Pexip Holding ASA on September 1, 2024 and sell it today you would earn a total of 240.00 from holding Pexip Holding ASA or generate 5.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SD Standard Drilling vs. Pexip Holding ASA
Performance |
| Timeline |
| SD Standard Drilling |
| Pexip Holding ASA |
SD Standard and Pexip Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SD Standard and Pexip Holding
The main advantage of trading using opposite SD Standard and Pexip Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SD Standard position performs unexpectedly, Pexip Holding 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 Pexip Holding will offset losses from the drop in Pexip Holding's long position.| SD Standard vs. Odfjell Drilling | SD Standard vs. Solstad Offsho | SD Standard vs. Reach Subsea | SD Standard vs. Eidesvik Offshore ASA |
| Pexip Holding vs. Elliptic Laboratories AS | Pexip Holding vs. Huddlestock Fintech As | Pexip Holding vs. Elkem ASA | Pexip Holding vs. Integrated Wind Solutions |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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