Correlation Between Solstad Offsho and Hafnia
Can any of the company-specific risk be diversified away by investing in both Solstad Offsho and Hafnia 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 Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offsho and Hafnia, you can compare the effects of market volatilities on Solstad Offsho and Hafnia 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 Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offsho and Hafnia.
Diversification Opportunities for Solstad Offsho and Hafnia
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Solstad and Hafnia is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offsho and Hafnia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia 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 Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia has no effect on the direction of Solstad Offsho i.e., Solstad Offsho and Hafnia go up and down completely randomly.
Pair Corralation between Solstad Offsho and Hafnia
Assuming the 90 days trading horizon Solstad Offsho is expected to generate 2.15 times more return on investment than Hafnia. However, Solstad Offsho is 2.15 times more volatile than Hafnia. It trades about 0.33 of its potential returns per unit of risk. Hafnia is currently generating about -0.2 per unit of risk. If you would invest 3,139 in Solstad Offsho on August 29, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offsho vs. Hafnia
Performance |
| Timeline |
| Solstad Offsho |
| Hafnia |
Solstad Offsho and Hafnia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offsho and Hafnia
The main advantage of trading using opposite Solstad Offsho and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offsho position performs unexpectedly, Hafnia 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 Hafnia will offset losses from the drop in Hafnia'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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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