Correlation Between Solstad Offshore and Coca-Cola Consolidated
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Coca-Cola Consolidated 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 Consolidated 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 Consolidated 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 Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Coca-Cola Consolidated.
Diversification Opportunities for Solstad Offshore and Coca-Cola Consolidated
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solstad and Coca-Cola is 0.4. 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 Consolidated. 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 Consolidated go up and down completely randomly.
Pair Corralation between Solstad Offshore and Coca-Cola Consolidated
Assuming the 90 days trading horizon Solstad Offshore is expected to generate 6.53 times less return on investment than Coca-Cola Consolidated. But when comparing it to its historical volatility, Solstad Offshore ASA is 1.04 times less risky than Coca-Cola Consolidated. It trades about 0.06 of its potential returns per unit of risk. Coca Cola Consolidated is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 115,000 in Coca Cola Consolidated on October 24, 2024 and sell it today you would earn a total of 18,000 from holding Coca Cola Consolidated or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Coca Cola Consolidated
Performance |
| Timeline |
| Solstad Offshore ASA |
| Coca Cola Consolidated |
Solstad Offshore and Coca-Cola Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Coca-Cola Consolidated
The main advantage of trading using opposite Solstad Offshore and Coca-Cola Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Coca-Cola Consolidated 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 Consolidated will offset losses from the drop in Coca-Cola Consolidated's long position.| Solstad Offshore vs. AP Mller | Solstad Offshore vs. AP Mller | Solstad Offshore vs. ZIM Integrated Shipping | Solstad Offshore vs. DFDS AS |
| Coca-Cola Consolidated vs. IERVOLINO ENTERTAINMENT | Coca-Cola Consolidated vs. Mitsui Chemicals | Coca-Cola Consolidated vs. SQUIRREL MEDIA SA | Coca-Cola Consolidated vs. Universal Entertainment |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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