Correlation Between Solstad Offsho and Akastor ASA
Can any of the company-specific risk be diversified away by investing in both Solstad Offsho and Akastor ASA 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 Offsho and Akastor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offsho and Akastor ASA, you can compare the effects of market volatilities on Solstad Offsho and Akastor ASA 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 Offsho with a short position of Akastor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offsho and Akastor ASA.
Diversification Opportunities for Solstad Offsho and Akastor ASA
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solstad and Akastor is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offsho and Akastor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akastor ASA and Solstad Offsho 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 Offsho are associated (or correlated) with Akastor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akastor ASA has no effect on the direction of Solstad Offsho i.e., Solstad Offsho and Akastor ASA go up and down completely randomly.
Pair Corralation between Solstad Offsho and Akastor ASA
Assuming the 90 days trading horizon Solstad Offsho is expected to generate 1.94 times more return on investment than Akastor ASA. However, Solstad Offsho is 1.94 times more volatile than Akastor ASA. It trades about 0.33 of its potential returns per unit of risk. Akastor ASA is currently generating about -0.04 per unit of risk. If you would invest 3,139 in Solstad Offsho on August 28, 2024 and sell it today you would earn a total of 1,201 from holding Solstad Offsho or generate 38.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offsho vs. Akastor ASA
Performance |
| Timeline |
| Solstad Offsho |
| Akastor ASA |
Solstad Offsho and Akastor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offsho and Akastor ASA
The main advantage of trading using opposite Solstad Offsho and Akastor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offsho position performs unexpectedly, Akastor ASA 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 Akastor ASA will offset losses from the drop in Akastor ASA's long position.The idea behind Solstad Offsho and Akastor ASA 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.| Akastor ASA vs. Subsea 7 SA | Akastor ASA vs. Aker ASA | Akastor ASA vs. Dno ASA | Akastor ASA vs. Aker Carbon Capture |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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