Correlation Between Solstad Offshore and Laureate Education
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Laureate Education 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 Laureate Education 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 Laureate Education, you can compare the effects of market volatilities on Solstad Offshore and Laureate Education 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 Laureate Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Laureate Education.
Diversification Opportunities for Solstad Offshore and Laureate Education
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solstad and Laureate is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Laureate Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Laureate Education 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 Laureate Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Laureate Education has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Laureate Education go up and down completely randomly.
Pair Corralation between Solstad Offshore and Laureate Education
Assuming the 90 days trading horizon Solstad Offshore is expected to generate 2.08 times less return on investment than Laureate Education. But when comparing it to its historical volatility, Solstad Offshore ASA is 1.93 times less risky than Laureate Education. It trades about 0.27 of its potential returns per unit of risk. Laureate Education is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 1,440 in Laureate Education on August 25, 2024 and sell it today you would earn a total of 350.00 from holding Laureate Education or generate 24.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Laureate Education
Performance |
| Timeline |
| Solstad Offshore ASA |
| Laureate Education |
Solstad Offshore and Laureate Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Laureate Education
The main advantage of trading using opposite Solstad Offshore and Laureate Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Laureate Education 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 Laureate Education will offset losses from the drop in Laureate Education's long position.| Solstad Offshore vs. Superior Plus Corp | Solstad Offshore vs. NMI Holdings | Solstad Offshore vs. Origin Agritech | Solstad Offshore vs. SIVERS SEMICONDUCTORS AB |
| Laureate Education vs. G III APPAREL GROUP | Laureate Education vs. CSSC Offshore Marine | Laureate Education vs. Solstad Offshore ASA | Laureate Education 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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