Correlation Between Transocean and Salon City

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

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

Diversification Opportunities for Transocean and Salon City

0.0

Correlation Coefficient

Transocean  Salon City

Pay attention - limited upside

The 3 months correlation between Transocean and Salon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Transocean and Salon City in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salon City and Transocean 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 Transocean are associated (or correlated) with Salon City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salon City has no effect on the direction of Transocean i.e., Transocean and Salon City go up and down completely randomly.

Pair Corralation between Transocean and Salon City

If you would invest  0.01  in Salon City on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Salon City 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

Transocean  vs.  Salon City

Transocean

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transocean has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Salon City

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salon City has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Salon City is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Transocean and Salon City

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

The idea behind Transocean and Salon City 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.