Correlation Between Caseys General and Solstad Offshore

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

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

Diversification Opportunities for Caseys General and Solstad Offshore

-0.03

Correlation Coefficient

Caseys General  Solstad Offshore

Good diversification

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

Pair Corralation between Caseys General and Solstad Offshore

Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.71 times more return on investment than Solstad Offshore. However, Caseys General Stores is 1.41 times less risky than Solstad Offshore. It trades about -0.01 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about -0.11 per unit of risk. If you would invest  39,551  in Caseys General Stores on December 3, 2024 and sell it today you would lose (551.00) from holding Caseys General Stores or give up 1.39% of portfolio value over 90 days.

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

Caseys General Stores  vs.  Solstad Offshore ASA

Caseys General Stores

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caseys General Stores has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Caseys General is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private 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. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Caseys General and Solstad Offshore

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

Check out your portfolio center.

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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.