Correlation Between Solstad Offshore and Tatton Asset

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

Diversification Opportunities for Solstad Offshore and Tatton Asset

-0.36

Correlation Coefficient

Solstad Offshore  Tatton Asset

Very good diversification

The 3 months correlation between Solstad and Tatton is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Tatton Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tatton Asset Management 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 Tatton Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tatton Asset Management has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Tatton Asset go up and down completely randomly.

Pair Corralation between Solstad Offshore and Tatton Asset

Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 2.52 times more return on investment than Tatton Asset. However, Solstad Offshore is 2.52 times more volatile than Tatton Asset Management. It trades about 0.13 of its potential returns per unit of risk. Tatton Asset Management is currently generating about -0.05 per unit of risk. If you would invest  3,138  in Solstad Offshore ASA on October 27, 2024 and sell it today you would earn a total of  966.00  from holding Solstad Offshore ASA or generate 30.78% return on investment over 90 days.

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

Solstad Offshore ASA  vs.  Tatton Asset Management

Solstad Offshore ASA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 10 (%) 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.

Tatton Asset Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tatton Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Tatton Asset is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Solstad Offshore and Tatton Asset

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

The idea behind Solstad Offshore ASA and Tatton Asset Management 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.