Correlation Between Solstad Offshore and ON SEMICONDUCTOR
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR 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 ON SEMICONDUCTOR, you can compare the effects of market volatilities on Solstad Offshore and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and ON SEMICONDUCTOR.
Diversification Opportunities for Solstad Offshore and ON SEMICONDUCTOR
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solstad and XS4 is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and ON SEMICONDUCTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON SEMICONDUCTOR 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 ON SEMICONDUCTOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON SEMICONDUCTOR has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and ON SEMICONDUCTOR go up and down completely randomly.
Pair Corralation between Solstad Offshore and ON SEMICONDUCTOR
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 1.02 times more return on investment than ON SEMICONDUCTOR. However, Solstad Offshore is 1.02 times more volatile than ON SEMICONDUCTOR. It trades about 0.03 of its potential returns per unit of risk. ON SEMICONDUCTOR is currently generating about -0.04 per unit of risk. If you would invest 296.00 in Solstad Offshore ASA on November 7, 2024 and sell it today you would earn a total of 40.00 from holding Solstad Offshore ASA or generate 13.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Solstad Offshore ASA vs. ON SEMICONDUCTOR
Performance |
| Timeline |
| Solstad Offshore ASA |
| ON SEMICONDUCTOR |
Solstad Offshore and ON SEMICONDUCTOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and ON SEMICONDUCTOR
The main advantage of trading using opposite Solstad Offshore and ON SEMICONDUCTOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, ON SEMICONDUCTOR 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 ON SEMICONDUCTOR will offset losses from the drop in ON SEMICONDUCTOR's long position.| Solstad Offshore vs. Jacquet Metal Service | Solstad Offshore vs. Ebro Foods SA | Solstad Offshore vs. PREMIER FOODS | Solstad Offshore vs. PLANT VEDA FOODS |
| ON SEMICONDUCTOR vs. RCI Hospitality Holdings | ON SEMICONDUCTOR vs. Verizon Communications | ON SEMICONDUCTOR vs. EPSILON HEALTHCARE LTD | ON SEMICONDUCTOR vs. Planet Fitness |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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