Correlation Between SOLSTAD OFFSHORE and Microsoft
Can any of the company-specific risk be diversified away by investing in both SOLSTAD OFFSHORE and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on SOLSTAD OFFSHORE and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLSTAD OFFSHORE and Microsoft.
Diversification Opportunities for SOLSTAD OFFSHORE and Microsoft
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SOLSTAD and Microsoft is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and Microsoft go up and down completely randomly.
Pair Corralation between SOLSTAD OFFSHORE and Microsoft
Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to generate 4.11 times more return on investment than Microsoft. However, SOLSTAD OFFSHORE is 4.11 times more volatile than Microsoft. It trades about 0.24 of its potential returns per unit of risk. Microsoft is currently generating about 0.3 per unit of risk. If you would invest 266.00 in SOLSTAD OFFSHORE NK on September 12, 2024 and sell it today you would earn a total of 73.00 from holding SOLSTAD OFFSHORE NK or generate 27.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOLSTAD OFFSHORE NK vs. Microsoft
Performance |
| Timeline |
| SOLSTAD OFFSHORE |
| Microsoft |
SOLSTAD OFFSHORE and Microsoft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOLSTAD OFFSHORE and Microsoft
The main advantage of trading using opposite SOLSTAD OFFSHORE and Microsoft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOLSTAD OFFSHORE position performs unexpectedly, Microsoft 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 Microsoft will offset losses from the drop in Microsoft'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 |
| Microsoft vs. Japan Asia Investment | Microsoft vs. ECHO INVESTMENT ZY | Microsoft vs. SWISS WATER DECAFFCOFFEE | Microsoft vs. Darden Restaurants |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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