Correlation Between Solstad Offshore and LION ONE
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and LION ONE 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 LION ONE 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 LION ONE METALS, you can compare the effects of market volatilities on Solstad Offshore and LION ONE 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 LION ONE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and LION ONE.
Diversification Opportunities for Solstad Offshore and LION ONE
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solstad and LION is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and LION ONE METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LION ONE METALS 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 LION ONE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LION ONE METALS has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and LION ONE go up and down completely randomly.
Pair Corralation between Solstad Offshore and LION ONE
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 1.51 times more return on investment than LION ONE. However, Solstad Offshore is 1.51 times more volatile than LION ONE METALS. It trades about 0.22 of its potential returns per unit of risk. LION ONE METALS is currently generating about -0.15 per unit of risk. If you would invest 269.00 in Solstad Offshore ASA on August 30, 2024 and sell it today you would earn a total of 76.00 from holding Solstad Offshore ASA or generate 28.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. LION ONE METALS
Performance |
| Timeline |
| Solstad Offshore ASA |
| LION ONE METALS |
Solstad Offshore and LION ONE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and LION ONE
The main advantage of trading using opposite Solstad Offshore and LION ONE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, LION ONE 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 LION ONE will offset losses from the drop in LION ONE's long position.| Solstad Offshore vs. Japan Post Insurance | Solstad Offshore vs. Ping An Insurance | Solstad Offshore vs. LION ONE METALS | Solstad Offshore vs. URBAN OUTFITTERS |
| LION ONE vs. ARISTOCRAT LEISURE | LION ONE vs. Solstad Offshore ASA | LION ONE vs. VIAPLAY GROUP AB | LION ONE vs. PLAYTIKA HOLDING DL 01 |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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