Correlation Between Solstad Offsho and Aker ASA
Can any of the company-specific risk be diversified away by investing in both Solstad Offsho and Aker 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 Aker 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 Aker ASA, you can compare the effects of market volatilities on Solstad Offsho and Aker 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 Aker ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offsho and Aker ASA.
Diversification Opportunities for Solstad Offsho and Aker ASA
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solstad and Aker is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offsho and Aker ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker 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 Aker ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker ASA has no effect on the direction of Solstad Offsho i.e., Solstad Offsho and Aker ASA go up and down completely randomly.
Pair Corralation between Solstad Offsho and Aker ASA
Assuming the 90 days trading horizon Solstad Offsho is expected to generate 50.3 times less return on investment than Aker ASA. In addition to that, Solstad Offsho is 1.72 times more volatile than Aker ASA. It trades about 0.0 of its total potential returns per unit of risk. Aker ASA is currently generating about 0.41 per unit of volatility. If you would invest 53,600 in Aker ASA on October 21, 2024 and sell it today you would earn a total of 4,800 from holding Aker ASA or generate 8.96% 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. Aker ASA
Performance |
| Timeline |
| Solstad Offsho |
| Aker ASA |
Solstad Offsho and Aker ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offsho and Aker ASA
The main advantage of trading using opposite Solstad Offsho and Aker ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offsho position performs unexpectedly, Aker 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 Aker ASA will offset losses from the drop in Aker ASA's long position.| Solstad Offsho vs. Havila Shipping ASA | Solstad Offsho vs. Prosafe SE | Solstad Offsho vs. Eidesvik Offshore ASA |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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