Correlation Between Solstad Offshore and Mercedes Benz
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Mercedes Benz 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 Mercedes Benz 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 Mercedes Benz Group AG, you can compare the effects of market volatilities on Solstad Offshore and Mercedes Benz 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 Mercedes Benz. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Mercedes Benz.
Diversification Opportunities for Solstad Offshore and Mercedes Benz
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Solstad and Mercedes is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Mercedes Benz Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercedes Benz Group 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 Mercedes Benz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercedes Benz Group has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Mercedes Benz go up and down completely randomly.
Pair Corralation between Solstad Offshore and Mercedes Benz
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 3.16 times more return on investment than Mercedes Benz. However, Solstad Offshore is 3.16 times more volatile than Mercedes Benz Group AG. It trades about 0.01 of its potential returns per unit of risk. Mercedes Benz Group AG is currently generating about -0.01 per unit of risk. If you would invest 396.00 in Solstad Offshore ASA on October 28, 2024 and sell it today you would lose (53.00) from holding Solstad Offshore ASA or give up 13.38% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Solstad Offshore ASA vs. Mercedes Benz Group AG
Performance |
Timeline |
Solstad Offshore ASA |
Mercedes Benz Group |
Solstad Offshore and Mercedes Benz Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Solstad Offshore and Mercedes Benz
The main advantage of trading using opposite Solstad Offshore and Mercedes Benz positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Mercedes Benz 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 Mercedes Benz will offset losses from the drop in Mercedes Benz's long position.Solstad Offshore vs. Geely Automobile Holdings | Solstad Offshore vs. Grupo Carso SAB | Solstad Offshore vs. VIVA WINE GROUP | Solstad Offshore vs. CarsalesCom |
Mercedes Benz vs. Performance Food Group | Mercedes Benz vs. DXC Technology Co | Mercedes Benz vs. X FAB Silicon Foundries | Mercedes Benz vs. CAL MAINE FOODS |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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