Correlation Between SD Standard and Techstep ASA
Can any of the company-specific risk be diversified away by investing in both SD Standard and Techstep ASA 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 SD Standard and Techstep ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SD Standard Drilling and Techstep ASA, you can compare the effects of market volatilities on SD Standard and Techstep ASA 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 SD Standard with a short position of Techstep ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of SD Standard and Techstep ASA.
Diversification Opportunities for SD Standard and Techstep ASA
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between SDSD and Techstep is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding SD Standard Drilling and Techstep ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techstep ASA and SD Standard 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 SD Standard Drilling are associated (or correlated) with Techstep ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techstep ASA has no effect on the direction of SD Standard i.e., SD Standard and Techstep ASA go up and down completely randomly.
Pair Corralation between SD Standard and Techstep ASA
Assuming the 90 days trading horizon SD Standard is expected to generate 15.59 times less return on investment than Techstep ASA. But when comparing it to its historical volatility, SD Standard Drilling is 3.1 times less risky than Techstep ASA. It trades about 0.0 of its potential returns per unit of risk. Techstep ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,205 in Techstep ASA on December 3, 2024 and sell it today you would earn a total of 15.00 from holding Techstep ASA or generate 1.24% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SD Standard Drilling vs. Techstep ASA
Performance |
Timeline |
SD Standard Drilling |
Techstep ASA |
SD Standard and Techstep ASA Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with SD Standard and Techstep ASA
The main advantage of trading using opposite SD Standard and Techstep ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SD Standard position performs unexpectedly, Techstep ASA 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 Techstep ASA will offset losses from the drop in Techstep ASA's long position.SD Standard vs. Odfjell Drilling | SD Standard vs. Solstad Offsho | SD Standard vs. Reach Subsea | SD Standard vs. Eidesvik Offshore ASA |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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