Correlation Between Solstad Offshore and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and INDOFOOD AGRI 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 INDOFOOD AGRI 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 INDOFOOD AGRI RES, you can compare the effects of market volatilities on Solstad Offshore and INDOFOOD AGRI 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 INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and INDOFOOD AGRI.
Diversification Opportunities for Solstad Offshore and INDOFOOD AGRI
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Solstad and INDOFOOD is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES 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 INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Solstad Offshore and INDOFOOD AGRI
Assuming the 90 days trading horizon Solstad Offshore is expected to generate 1.77 times less return on investment than INDOFOOD AGRI. In addition to that, Solstad Offshore is 1.51 times more volatile than INDOFOOD AGRI RES. It trades about 0.03 of its total potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.09 per unit of volatility. If you would invest 18.00 in INDOFOOD AGRI RES on November 1, 2024 and sell it today you would earn a total of 4.00 from holding INDOFOOD AGRI RES or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Solstad Offshore ASA |
| INDOFOOD AGRI RES |
Solstad Offshore and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and INDOFOOD AGRI
The main advantage of trading using opposite Solstad Offshore and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.| Solstad Offshore vs. CDN IMPERIAL BANK | Solstad Offshore vs. Virtu Financial | Solstad Offshore vs. HF SINCLAIR P | Solstad Offshore vs. SOGECLAIR SA INH |
| INDOFOOD AGRI vs. Hitachi Construction Machinery | INDOFOOD AGRI vs. NURAN WIRELESS INC | INDOFOOD AGRI vs. RYU Apparel | INDOFOOD AGRI vs. CENTURIA OFFICE REIT |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes |