Correlation Between Solstad Offshore and SANTANDER

Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and SANTANDER 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 SANTANDER 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 SANTANDER UK 8, you can compare the effects of market volatilities on Solstad Offshore and SANTANDER 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 SANTANDER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and SANTANDER.

Diversification Opportunities for Solstad Offshore and SANTANDER

-0.29

Correlation Coefficient

Solstad Offshore  SANTANDER

Very good diversification

The 3 months correlation between Solstad and SANTANDER is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and SANTANDER UK 8 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANTANDER UK 8 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 SANTANDER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANTANDER UK 8 has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and SANTANDER go up and down completely randomly.

Pair Corralation between Solstad Offshore and SANTANDER

Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 14.31 times more return on investment than SANTANDER. However, Solstad Offshore is 14.31 times more volatile than SANTANDER UK 8. It trades about 0.12 of its potential returns per unit of risk. SANTANDER UK 8 is currently generating about -0.13 per unit of risk. If you would invest  3,138  in Solstad Offshore ASA on October 20, 2024 and sell it today you would earn a total of  868.00  from holding Solstad Offshore ASA or generate 27.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Solstad Offshore ASA  vs.  SANTANDER UK 8

Solstad Offshore ASA

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Solstad Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

SANTANDER UK 8

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SANTANDER UK 8 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SANTANDER is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Solstad Offshore and SANTANDER

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

The idea behind Solstad Offshore ASA and SANTANDER UK 8 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.