Correlation Between Solstad Offshore and Coca Cola
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Coca Cola 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 Coca Cola into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offshore ASA and Coca Cola Consolidated, you can compare the effects of market volatilities on Solstad Offshore and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Coca Cola.
Diversification Opportunities for Solstad Offshore and Coca Cola
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solstad and Coca is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Coca Cola Consolidated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Consolidated 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 ASA are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Consolidated has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Coca Cola go up and down completely randomly.
Pair Corralation between Solstad Offshore and Coca Cola
Assuming the 90 days trading horizon Solstad Offshore is expected to generate 1.5 times less return on investment than Coca Cola. In addition to that, Solstad Offshore is 1.54 times more volatile than Coca Cola Consolidated. It trades about 0.05 of its total potential returns per unit of risk. Coca Cola Consolidated is currently generating about 0.12 per unit of volatility. If you would invest 63,483 in Coca Cola Consolidated on September 14, 2024 and sell it today you would earn a total of 56,517 from holding Coca Cola Consolidated or generate 89.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Coca Cola Consolidated
Performance |
| Timeline |
| Solstad Offshore ASA |
| Coca Cola Consolidated |
Solstad Offshore and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Coca Cola
The main advantage of trading using opposite Solstad Offshore and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola'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 |
| Coca Cola vs. Solstad Offshore ASA | Coca Cola vs. Evolution Mining Limited | Coca Cola vs. National Beverage Corp | Coca Cola vs. THAI BEVERAGE |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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