Correlation Between Solstad Offshore and FIREWEED METALS
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and FIREWEED METALS 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 FIREWEED METALS 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 FIREWEED METALS P, you can compare the effects of market volatilities on Solstad Offshore and FIREWEED METALS 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 FIREWEED METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and FIREWEED METALS.
Diversification Opportunities for Solstad Offshore and FIREWEED METALS
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Solstad and FIREWEED is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and FIREWEED METALS P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIREWEED METALS P 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 FIREWEED METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIREWEED METALS P has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and FIREWEED METALS go up and down completely randomly.
Pair Corralation between Solstad Offshore and FIREWEED METALS
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to under-perform the FIREWEED METALS. But the stock apears to be less risky and, when comparing its historical volatility, Solstad Offshore ASA is 2.14 times less risky than FIREWEED METALS. The stock trades about -0.2 of its potential returns per unit of risk. The FIREWEED METALS P is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 101.00 in FIREWEED METALS P on November 28, 2024 and sell it today you would earn a total of 10.00 from holding FIREWEED METALS P or generate 9.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Solstad Offshore ASA vs. FIREWEED METALS P
Performance |
| Timeline |
| Solstad Offshore ASA |
| FIREWEED METALS P |
Solstad Offshore and FIREWEED METALS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and FIREWEED METALS
The main advantage of trading using opposite Solstad Offshore and FIREWEED METALS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, FIREWEED METALS 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 FIREWEED METALS will offset losses from the drop in FIREWEED METALS's long position.| Solstad Offshore vs. Take Two Interactive Software | Solstad Offshore vs. Major Drilling Group | Solstad Offshore vs. Guidewire Software | Solstad Offshore vs. ATOSS SOFTWARE |
| FIREWEED METALS vs. Mitsubishi Materials | FIREWEED METALS vs. NAGOYA RAILROAD | FIREWEED METALS vs. THRACE PLASTICS | FIREWEED METALS vs. Kaufman Broad SA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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