Correlation Between ASPEN TECHINC and Solstad Offshore
Can any of the company-specific risk be diversified away by investing in both ASPEN TECHINC and Solstad Offshore 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 ASPEN TECHINC and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ASPEN TECHINC DL and Solstad Offshore ASA, you can compare the effects of market volatilities on ASPEN TECHINC and Solstad Offshore 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 ASPEN TECHINC with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of ASPEN TECHINC and Solstad Offshore.
Diversification Opportunities for ASPEN TECHINC and Solstad Offshore
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ASPEN and Solstad is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ASPEN TECHINC DL and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA and ASPEN TECHINC 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 ASPEN TECHINC DL are associated (or correlated) with Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of ASPEN TECHINC i.e., ASPEN TECHINC and Solstad Offshore go up and down completely randomly.
Pair Corralation between ASPEN TECHINC and Solstad Offshore
Assuming the 90 days horizon ASPEN TECHINC DL is expected to generate 0.27 times more return on investment than Solstad Offshore. However, ASPEN TECHINC DL is 3.66 times less risky than Solstad Offshore. It trades about 0.17 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.04 per unit of risk. If you would invest 23,600 in ASPEN TECHINC DL on October 20, 2024 and sell it today you would earn a total of 400.00 from holding ASPEN TECHINC DL or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ASPEN TECHINC DL vs. Solstad Offshore ASA
Performance |
| Timeline |
| ASPEN TECHINC DL |
| Solstad Offshore ASA |
ASPEN TECHINC and Solstad Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ASPEN TECHINC and Solstad Offshore
The main advantage of trading using opposite ASPEN TECHINC and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASPEN TECHINC position performs unexpectedly, Solstad Offshore 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 Offshore will offset losses from the drop in Solstad Offshore's long position.| ASPEN TECHINC vs. AEON METALS LTD | ASPEN TECHINC vs. Automatic Data Processing | ASPEN TECHINC vs. Nippon Light Metal | ASPEN TECHINC vs. China Datang |
| Solstad Offshore vs. GLG LIFE TECH | Solstad Offshore vs. Playtech plc | Solstad Offshore vs. ASPEN TECHINC DL | Solstad Offshore vs. PKSHA TECHNOLOGY INC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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