Correlation Between Solstad Offsho and TGS NOPEC
Can any of the company-specific risk be diversified away by investing in both Solstad Offsho and TGS NOPEC 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 TGS NOPEC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offsho and TGS NOPEC Geophysical, you can compare the effects of market volatilities on Solstad Offsho and TGS NOPEC 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 TGS NOPEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offsho and TGS NOPEC.
Diversification Opportunities for Solstad Offsho and TGS NOPEC
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solstad and TGS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offsho and TGS NOPEC Geophysical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TGS NOPEC Geophysical 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 TGS NOPEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TGS NOPEC Geophysical has no effect on the direction of Solstad Offsho i.e., Solstad Offsho and TGS NOPEC go up and down completely randomly.
Pair Corralation between Solstad Offsho and TGS NOPEC
Assuming the 90 days trading horizon Solstad Offsho is expected to generate 1.16 times more return on investment than TGS NOPEC. However, Solstad Offsho is 1.16 times more volatile than TGS NOPEC Geophysical. It trades about 0.01 of its potential returns per unit of risk. TGS NOPEC Geophysical is currently generating about 0.0 per unit of risk. If you would invest 4,074 in Solstad Offsho on September 14, 2024 and sell it today you would lose (222.00) from holding Solstad Offsho or give up 5.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offsho vs. TGS NOPEC Geophysical
Performance |
| Timeline |
| Solstad Offsho |
| TGS NOPEC Geophysical |
Solstad Offsho and TGS NOPEC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offsho and TGS NOPEC
The main advantage of trading using opposite Solstad Offsho and TGS NOPEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offsho position performs unexpectedly, TGS NOPEC 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 TGS NOPEC will offset losses from the drop in TGS NOPEC's long position.| Solstad Offsho vs. Havila Shipping ASA | Solstad Offsho vs. Prosafe SE | Solstad Offsho vs. Eidesvik Offshore ASA |
| TGS NOPEC vs. Solstad Offsho | TGS NOPEC vs. Prosafe SE | TGS NOPEC vs. BW Offshore | TGS NOPEC vs. Kongsberg Gruppen ASA |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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