Correlation Between Solstad Offshore and St Galler

Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and St Galler 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 St Galler 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 St Galler Kantonalbank, you can compare the effects of market volatilities on Solstad Offshore and St Galler 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 St Galler. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and St Galler.

Diversification Opportunities for Solstad Offshore and St Galler

-0.82

Correlation Coefficient

Solstad Offshore  St Galler

Pay attention - limited upside

The 3 months correlation between Solstad and 0QQZ is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and St Galler Kantonalbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on St Galler Kantonalbank 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 St Galler. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of St Galler Kantonalbank has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and St Galler go up and down completely randomly.

Pair Corralation between Solstad Offshore and St Galler

Assuming the 90 days trading horizon Solstad Offshore ASA is expected to under-perform the St Galler. In addition to that, Solstad Offshore is 2.49 times more volatile than St Galler Kantonalbank. It trades about -0.07 of its total potential returns per unit of risk. St Galler Kantonalbank is currently generating about 0.23 per unit of volatility. If you would invest  43,700  in St Galler Kantonalbank on December 30, 2024 and sell it today you would earn a total of  4,900  from holding St Galler Kantonalbank or generate 11.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Solstad Offshore ASA  vs.  St Galler Kantonalbank

Solstad Offshore ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solstad Offshore ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

St Galler Kantonalbank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in St Galler Kantonalbank are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, St Galler may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Solstad Offshore and St Galler

The main advantage of trading using opposite Solstad Offshore and St Galler positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, St Galler 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 St Galler will offset losses from the drop in St Galler's long position.

The idea behind Solstad Offshore ASA and St Galler Kantonalbank pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.