Correlation Between Solstad Offshore and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Insteel Industries 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 Solstad Offshore and Insteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offshore ASA and Insteel Industries, you can compare the effects of market volatilities on Solstad Offshore and Insteel Industries 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 Solstad Offshore with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Insteel Industries.
Diversification Opportunities for Solstad Offshore and Insteel Industries
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Solstad and Insteel is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and Solstad Offshore 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 Solstad Offshore ASA are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Insteel Industries go up and down completely randomly.
Pair Corralation between Solstad Offshore and Insteel Industries
Assuming the 90 days horizon Solstad Offshore ASA is expected to generate 2.19 times more return on investment than Insteel Industries. However, Solstad Offshore is 2.19 times more volatile than Insteel Industries. It trades about 0.05 of its potential returns per unit of risk. Insteel Industries is currently generating about 0.01 per unit of risk. If you would invest 151.00 in Solstad Offshore ASA on September 3, 2024 and sell it today you would earn a total of 158.00 from holding Solstad Offshore ASA or generate 104.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Insteel Industries
Performance |
| Timeline |
| Solstad Offshore ASA |
| Insteel Industries |
Solstad Offshore and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Insteel Industries
The main advantage of trading using opposite Solstad Offshore and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.| Solstad Offshore vs. Hapag Lloyd Aktiengesellschaft | Solstad Offshore vs. COSCO SHIPPING Holdings | Solstad Offshore vs. Nippon Yusen Kabushiki | Solstad Offshore vs. Orient Overseas Limited |
| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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