Correlation Between Solstad Offshore and Mach Natural

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

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

Diversification Opportunities for Solstad Offshore and Mach Natural

0.0

Correlation Coefficient

Solstad Offshore  Mach Natural

Pay attention - limited upside

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

Pair Corralation between Solstad Offshore and Mach Natural

Assuming the 90 days horizon Solstad Offshore ASA is expected to generate 3.44 times more return on investment than Mach Natural. However, Solstad Offshore is 3.44 times more volatile than Mach Natural Resources. It trades about 0.07 of its potential returns per unit of risk. Mach Natural Resources is currently generating about 0.06 per unit of risk. If you would invest  151.00  in Solstad Offshore ASA on October 22, 2024 and sell it today you would earn a total of  158.00  from holding Solstad Offshore ASA or generate 104.64% return on investment over 90 days.

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

Solstad Offshore ASA  vs.  Mach Natural Resources

Solstad Offshore ASA

Risk-Adjusted Performance

0 of 100

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.

Mach Natural Resources

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mach Natural Resources are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Mach Natural reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solstad Offshore and Mach Natural

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

The idea behind Solstad Offshore ASA and Mach Natural Resources 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.