Correlation Between Solstad Offshore and Nishi Nippon
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Nishi Nippon 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 Nishi Nippon 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 Nishi Nippon Railroad Co, you can compare the effects of market volatilities on Solstad Offshore and Nishi Nippon 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 Nishi Nippon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Nishi Nippon.
Diversification Opportunities for Solstad Offshore and Nishi Nippon
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solstad and Nishi is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Nishi Nippon Railroad Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nishi Nippon Railroad 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 Nishi Nippon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nishi Nippon Railroad has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Nishi Nippon go up and down completely randomly.
Pair Corralation between Solstad Offshore and Nishi Nippon
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 3.29 times more return on investment than Nishi Nippon. However, Solstad Offshore is 3.29 times more volatile than Nishi Nippon Railroad Co. It trades about 0.3 of its potential returns per unit of risk. Nishi Nippon Railroad Co is currently generating about 0.29 per unit of risk. If you would invest 260.00 in Solstad Offshore ASA on August 29, 2024 and sell it today you would earn a total of 105.00 from holding Solstad Offshore ASA or generate 40.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Nishi Nippon Railroad Co
Performance |
| Timeline |
| Solstad Offshore ASA |
| Nishi Nippon Railroad |
Solstad Offshore and Nishi Nippon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Nishi Nippon
The main advantage of trading using opposite Solstad Offshore and Nishi Nippon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Nishi Nippon 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 Nishi Nippon will offset losses from the drop in Nishi Nippon'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 |
| Nishi Nippon vs. Westinghouse Air Brake | Nishi Nippon vs. Superior Plus Corp | Nishi Nippon vs. NMI Holdings | Nishi Nippon vs. Origin Agritech |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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