Correlation Between Compass Diversified and Solstad Offshore

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

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

Diversification Opportunities for Compass Diversified and Solstad Offshore

0.0

Correlation Coefficient

Compass Diversified  Solstad Offshore

Pay attention - limited upside

The 3 months correlation between Compass and Solstad is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Compass Diversified Holdings 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 Compass Diversified 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 Compass Diversified Holdings 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 Compass Diversified i.e., Compass Diversified and Solstad Offshore go up and down completely randomly.

Pair Corralation between Compass Diversified and Solstad Offshore

If you would invest  309.00  in Solstad Offshore ASA on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Solstad Offshore ASA or generate 0.0% return on investment over 90 days.

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

Compass Diversified Holdings  vs.  Solstad Offshore ASA

Compass Diversified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Compass Diversified Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Compass Diversified is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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. Despite nearly stable technical and fundamental indicators, Solstad Offshore is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Compass Diversified and Solstad Offshore

The main advantage of trading using opposite Compass Diversified and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Diversified 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 Compass Diversified Holdings 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.