Correlation Between Vow ASA and Solstad Offsho
Can any of the company-specific risk be diversified away by investing in both Vow ASA and Solstad Offsho 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 Vow ASA and Solstad Offsho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vow ASA and Solstad Offsho, you can compare the effects of market volatilities on Vow ASA and Solstad Offsho 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 Vow ASA with a short position of Solstad Offsho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and Solstad Offsho.
Diversification Opportunities for Vow ASA and Solstad Offsho
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vow and Solstad is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and Solstad Offsho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offsho and Vow ASA 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 Vow ASA are associated (or correlated) with Solstad Offsho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offsho has no effect on the direction of Vow ASA i.e., Vow ASA and Solstad Offsho go up and down completely randomly.
Pair Corralation between Vow ASA and Solstad Offsho
Assuming the 90 days trading horizon Vow ASA is expected to under-perform the Solstad Offsho. In addition to that, Vow ASA is 1.7 times more volatile than Solstad Offsho. It trades about -0.23 of its total potential returns per unit of risk. Solstad Offsho is currently generating about 0.33 per unit of volatility. If you would invest 3,139 in Solstad Offsho on August 29, 2024 and sell it today you would earn a total of 1,201 from holding Solstad Offsho or generate 38.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vow ASA vs. Solstad Offsho
Performance |
| Timeline |
| Vow ASA |
| Solstad Offsho |
Vow ASA and Solstad Offsho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vow ASA and Solstad Offsho
The main advantage of trading using opposite Vow ASA and Solstad Offsho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vow ASA position performs unexpectedly, Solstad Offsho 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 Solstad Offsho will offset losses from the drop in Solstad Offsho's long position.| Vow ASA vs. Arctic Bioscience AS | Vow ASA vs. ADS Maritime Holding | Vow ASA vs. Arctic Fish Holding | Vow ASA vs. Instabank ASA |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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