Correlation Between Solstad Offshore and PVH Corp
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and PVH Corp 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 PVH Corp 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 PVH Corp, you can compare the effects of market volatilities on Solstad Offshore and PVH Corp 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 PVH Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and PVH Corp.
Diversification Opportunities for Solstad Offshore and PVH Corp
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solstad and PVH is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and PVH Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVH Corp 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 PVH Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVH Corp has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and PVH Corp go up and down completely randomly.
Pair Corralation between Solstad Offshore and PVH Corp
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 0.92 times more return on investment than PVH Corp. However, Solstad Offshore ASA is 1.08 times less risky than PVH Corp. It trades about 0.07 of its potential returns per unit of risk. PVH Corp is currently generating about -0.43 per unit of risk. If you would invest 330.00 in Solstad Offshore ASA on October 30, 2024 and sell it today you would earn a total of 8.00 from holding Solstad Offshore ASA or generate 2.42% 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. PVH Corp
Performance |
| Timeline |
| Solstad Offshore ASA |
| PVH Corp |
Solstad Offshore and PVH Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and PVH Corp
The main advantage of trading using opposite Solstad Offshore and PVH Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, PVH Corp 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 PVH Corp will offset losses from the drop in PVH Corp's long position.| Solstad Offshore vs. Nok Airlines PCL | Solstad Offshore vs. China Eastern Airlines | Solstad Offshore vs. International Consolidated Airlines | Solstad Offshore vs. IMPERIAL TOBACCO |
| PVH Corp vs. AOYAMA TRADING | PVH Corp vs. Apollo Investment Corp | PVH Corp vs. Comba Telecom Systems | PVH Corp vs. HUTCHISON TELECOMM |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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