Correlation Between Solstad Offshore and Banpu PCL
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Banpu PCL 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 Banpu PCL 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 Banpu PCL, you can compare the effects of market volatilities on Solstad Offshore and Banpu PCL 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 Banpu PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Banpu PCL.
Diversification Opportunities for Solstad Offshore and Banpu PCL
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Solstad and Banpu is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Banpu PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banpu PCL 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 Banpu PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banpu PCL has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Banpu PCL go up and down completely randomly.
Pair Corralation between Solstad Offshore and Banpu PCL
Assuming the 90 days trading horizon Solstad Offshore is expected to generate 4.08 times less return on investment than Banpu PCL. But when comparing it to its historical volatility, Solstad Offshore ASA is 2.02 times less risky than Banpu PCL. It trades about 0.02 of its potential returns per unit of risk. Banpu PCL is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Banpu PCL on September 5, 2024 and sell it today you would earn a total of 1.00 from holding Banpu PCL or generate 7.14% 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. Banpu PCL
Performance |
| Timeline |
| Solstad Offshore ASA |
| Banpu PCL |
Solstad Offshore and Banpu PCL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Banpu PCL
The main advantage of trading using opposite Solstad Offshore and Banpu PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Banpu PCL 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 Banpu PCL will offset losses from the drop in Banpu PCL's long position.| Solstad Offshore vs. Wilh Wilhelmsen Holding | Solstad Offshore vs. Superior Plus Corp | Solstad Offshore vs. NMI Holdings | Solstad Offshore vs. Origin Agritech |
| Banpu PCL vs. Algonquin Power Utilities | Banpu PCL vs. Warner Music Group | Banpu PCL vs. Solstad Offshore ASA | Banpu PCL vs. BW OFFSHORE LTD |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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