Correlation Between Centaur Media and Solstad Offshore

Can any of the company-specific risk be diversified away by investing in both Centaur Media 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 Centaur Media and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Centaur Media and Solstad Offshore ASA, you can compare the effects of market volatilities on Centaur Media 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 Centaur Media with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centaur Media and Solstad Offshore.

Diversification Opportunities for Centaur Media and Solstad Offshore

0.03

Correlation Coefficient

Centaur Media  Solstad Offshore

Significant diversification

The 3 months correlation between Centaur and Solstad is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Centaur Media 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 Centaur Media 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 Centaur Media 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 Centaur Media i.e., Centaur Media and Solstad Offshore go up and down completely randomly.

Pair Corralation between Centaur Media and Solstad Offshore

Assuming the 90 days trading horizon Centaur Media is expected to generate 1.26 times more return on investment than Solstad Offshore. However, Centaur Media is 1.26 times more volatile than Solstad Offshore ASA. It trades about 0.1 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about -0.09 per unit of risk. If you would invest  2,300  in Centaur Media on November 27, 2024 and sell it today you would earn a total of  350.00  from holding Centaur Media or generate 15.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Centaur Media  vs.  Solstad Offshore ASA

Centaur Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Media are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Centaur Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Centaur Media and Solstad Offshore

The main advantage of trading using opposite Centaur Media and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centaur Media 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.

The idea behind Centaur Media and Solstad Offshore ASA 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.