Correlation Between Solstad Offshore and Techtronic Industries
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Techtronic Industries 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 Techtronic Industries 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 Techtronic Industries, you can compare the effects of market volatilities on Solstad Offshore and Techtronic Industries 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 Techtronic Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Techtronic Industries.
Diversification Opportunities for Solstad Offshore and Techtronic Industries
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solstad and Techtronic is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Techtronic Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techtronic Industries 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 Techtronic Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techtronic Industries has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Techtronic Industries go up and down completely randomly.
Pair Corralation between Solstad Offshore and Techtronic Industries
Assuming the 90 days trading horizon Solstad Offshore is expected to generate 1.77 times less return on investment than Techtronic Industries. But when comparing it to its historical volatility, Solstad Offshore ASA is 1.29 times less risky than Techtronic Industries. It trades about 0.06 of its potential returns per unit of risk. Techtronic Industries is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,229 in Techtronic Industries on October 23, 2024 and sell it today you would earn a total of 38.00 from holding Techtronic Industries or generate 3.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Techtronic Industries
Performance |
| Timeline |
| Solstad Offshore ASA |
| Techtronic Industries |
Solstad Offshore and Techtronic Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Techtronic Industries
The main advantage of trading using opposite Solstad Offshore and Techtronic Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Techtronic Industries 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 Techtronic Industries will offset losses from the drop in Techtronic Industries' long position.| Solstad Offshore vs. STORE ELECTRONIC | Solstad Offshore vs. NEWELL RUBBERMAID | Solstad Offshore vs. APPLIED MATERIALS | Solstad Offshore vs. Electronic Arts |
| Techtronic Industries vs. SOUTHWEST AIRLINES | Techtronic Industries vs. SOLSTAD OFFSHORE NK | Techtronic Industries vs. Salesforce | Techtronic Industries vs. Solstad Offshore ASA |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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