Correlation Between Atea ASA and SOLSTAD OFFSHORE

Can any of the company-specific risk be diversified away by investing in both Atea ASA 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 Atea ASA and SOLSTAD OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Atea ASA and SOLSTAD OFFSHORE

0.55

Correlation Coefficient

Atea ASA  SOLSTAD OFFSHORE

Very weak diversification

The 3 months correlation between Atea and SOLSTAD is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Atea ASA and SOLSTAD OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLSTAD OFFSHORE and Atea ASA 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 Atea ASA 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 has no effect on the direction of Atea ASA i.e., Atea ASA and SOLSTAD OFFSHORE go up and down completely randomly.

Pair Corralation between Atea ASA and SOLSTAD OFFSHORE

Assuming the 90 days trading horizon Atea ASA is expected to generate 0.54 times more return on investment than SOLSTAD OFFSHORE. However, Atea ASA is 1.85 times less risky than SOLSTAD OFFSHORE. It trades about -0.01 of its potential returns per unit of risk. SOLSTAD OFFSHORE NK is currently generating about -0.05 per unit of risk. If you would invest  1,162  in Atea ASA on December 21, 2024 and sell it today you would lose (12.00) from holding Atea ASA or give up 1.03% of portfolio value over 90 days.

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

Atea ASA  vs.  SOLSTAD OFFSHORE NK

Atea ASA

Risk-Adjusted Performance

Very Weak

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

SOLSTAD OFFSHORE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SOLSTAD OFFSHORE NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Atea ASA and SOLSTAD OFFSHORE

The main advantage of trading using opposite Atea ASA and SOLSTAD OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Atea ASA 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 Atea ASA and SOLSTAD OFFSHORE NK 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.