Correlation Between SOLSTAD OFFSHORE and Commercial Vehicle
Can any of the company-specific risk be diversified away by investing in both SOLSTAD OFFSHORE and Commercial Vehicle 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 Commercial Vehicle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOLSTAD OFFSHORE NK and Commercial Vehicle Group, you can compare the effects of market volatilities on SOLSTAD OFFSHORE and Commercial Vehicle 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 Commercial Vehicle. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLSTAD OFFSHORE and Commercial Vehicle.
Diversification Opportunities for SOLSTAD OFFSHORE and Commercial Vehicle
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SOLSTAD and Commercial is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK and Commercial Vehicle Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial Vehicle 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 NK are associated (or correlated) with Commercial Vehicle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial Vehicle has no effect on the direction of SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and Commercial Vehicle go up and down completely randomly.
Pair Corralation between SOLSTAD OFFSHORE and Commercial Vehicle
Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to generate 1.37 times more return on investment than Commercial Vehicle. However, SOLSTAD OFFSHORE is 1.37 times more volatile than Commercial Vehicle Group. It trades about 0.03 of its potential returns per unit of risk. Commercial Vehicle Group is currently generating about -0.05 per unit of risk. If you would invest 300.00 in SOLSTAD OFFSHORE NK on September 12, 2024 and sell it today you would earn a total of 39.00 from holding SOLSTAD OFFSHORE NK or generate 13.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOLSTAD OFFSHORE NK vs. Commercial Vehicle Group
Performance |
| Timeline |
| SOLSTAD OFFSHORE |
| Commercial Vehicle |
SOLSTAD OFFSHORE and Commercial Vehicle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOLSTAD OFFSHORE and Commercial Vehicle
The main advantage of trading using opposite SOLSTAD OFFSHORE and Commercial Vehicle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOLSTAD OFFSHORE position performs unexpectedly, Commercial Vehicle 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 Commercial Vehicle will offset losses from the drop in Commercial Vehicle's long position.| SOLSTAD OFFSHORE vs. Superior Plus Corp | SOLSTAD OFFSHORE vs. SIVERS SEMICONDUCTORS AB | SOLSTAD OFFSHORE vs. CHINA HUARONG ENERHD 50 | SOLSTAD OFFSHORE vs. NORDIC HALIBUT AS |
| Commercial Vehicle vs. Reinsurance Group of | Commercial Vehicle vs. SOLSTAD OFFSHORE NK | Commercial Vehicle vs. SBI Insurance Group | Commercial Vehicle vs. SBM OFFSHORE |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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