Correlation Between Solstad Offshore and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and KNOT 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 Solstad Offshore and KNOT Offshore 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 KNOT Offshore Partners, you can compare the effects of market volatilities on Solstad Offshore and KNOT 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 Solstad Offshore with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and KNOT Offshore.
Diversification Opportunities for Solstad Offshore and KNOT Offshore
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Solstad and KNOT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and KNOT Offshore Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNOT Offshore Partners 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 KNOT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNOT Offshore Partners has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and KNOT Offshore go up and down completely randomly.
Pair Corralation between Solstad Offshore and KNOT Offshore
Assuming the 90 days horizon Solstad Offshore ASA is expected to generate 1.49 times more return on investment than KNOT Offshore. However, Solstad Offshore is 1.49 times more volatile than KNOT Offshore Partners. It trades about 0.04 of its potential returns per unit of risk. KNOT Offshore Partners is currently generating about -0.01 per unit of risk. If you would invest 151.00 in Solstad Offshore ASA on August 30, 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 | 99.8% |
| Values | Daily Returns |
Solstad Offshore ASA vs. KNOT Offshore Partners
Performance |
| Timeline |
| Solstad Offshore ASA |
| KNOT Offshore Partners |
Solstad Offshore and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and KNOT Offshore
The main advantage of trading using opposite Solstad Offshore and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, KNOT 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 KNOT Offshore will offset losses from the drop in KNOT Offshore's long position.| Solstad Offshore vs. Radcom | Solstad Offshore vs. Senmiao Technology | Solstad Offshore vs. Fossil Group | Solstad Offshore vs. Canlan Ice Sports |
| KNOT Offshore vs. Danaos | KNOT Offshore vs. Global Ship Lease | KNOT Offshore vs. Euroseas | KNOT Offshore vs. Navios Maritime Partners |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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