Correlation Between Solstad Offshore and Silver Mines
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Silver Mines 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 Silver Mines 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 Silver Mines Limited, you can compare the effects of market volatilities on Solstad Offshore and Silver Mines 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 Silver Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Silver Mines.
Diversification Opportunities for Solstad Offshore and Silver Mines
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solstad and Silver is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Silver Mines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silver Mines Limited 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 Silver Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silver Mines Limited has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Silver Mines go up and down completely randomly.
Pair Corralation between Solstad Offshore and Silver Mines
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 0.43 times more return on investment than Silver Mines. However, Solstad Offshore ASA is 2.3 times less risky than Silver Mines. It trades about 0.08 of its potential returns per unit of risk. Silver Mines Limited is currently generating about -0.07 per unit of risk. If you would invest 332.00 in Solstad Offshore ASA on October 26, 2024 and sell it today you would earn a total of 9.00 from holding Solstad Offshore ASA or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Silver Mines Limited
Performance |
| Timeline |
| Solstad Offshore ASA |
| Silver Mines Limited |
Solstad Offshore and Silver Mines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Silver Mines
The main advantage of trading using opposite Solstad Offshore and Silver Mines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Silver Mines 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 Silver Mines will offset losses from the drop in Silver Mines' long position.| Solstad Offshore vs. AP Mller | Solstad Offshore vs. AP Mller | Solstad Offshore vs. HAPAG LLOYD UNSPADR 12 | Solstad Offshore vs. DFDS AS |
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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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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