Correlation Between Solstad Offshore and GEAR4MUSIC
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and GEAR4MUSIC 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 GEAR4MUSIC 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 GEAR4MUSIC LS 10, you can compare the effects of market volatilities on Solstad Offshore and GEAR4MUSIC 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 GEAR4MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and GEAR4MUSIC.
Diversification Opportunities for Solstad Offshore and GEAR4MUSIC
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Solstad and GEAR4MUSIC is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and GEAR4MUSIC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEAR4MUSIC LS 10 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 GEAR4MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEAR4MUSIC LS 10 has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and GEAR4MUSIC go up and down completely randomly.
Pair Corralation between Solstad Offshore and GEAR4MUSIC
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 1.48 times more return on investment than GEAR4MUSIC. However, Solstad Offshore is 1.48 times more volatile than GEAR4MUSIC LS 10. It trades about 0.05 of its potential returns per unit of risk. GEAR4MUSIC LS 10 is currently generating about 0.07 per unit of risk. If you would invest 237.00 in Solstad Offshore ASA on September 14, 2024 and sell it today you would earn a total of 88.00 from holding Solstad Offshore ASA or generate 37.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. GEAR4MUSIC LS 10
Performance |
| Timeline |
| Solstad Offshore ASA |
| GEAR4MUSIC LS 10 |
Solstad Offshore and GEAR4MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and GEAR4MUSIC
The main advantage of trading using opposite Solstad Offshore and GEAR4MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, GEAR4MUSIC 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 GEAR4MUSIC will offset losses from the drop in GEAR4MUSIC'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 |
| GEAR4MUSIC vs. The Trade Desk | GEAR4MUSIC vs. TRADEGATE | GEAR4MUSIC vs. Solstad Offshore ASA | GEAR4MUSIC vs. Warner Music Group |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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