Correlation Between Solstad Offsho and Bonheur

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

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

Diversification Opportunities for Solstad Offsho and Bonheur

0.11

Correlation Coefficient

Solstad Offsho  Bonheur

Average diversification

The 3 months correlation between Solstad and Bonheur is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offsho and Bonheur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonheur and Solstad Offsho 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 Offsho are associated (or correlated) with Bonheur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonheur has no effect on the direction of Solstad Offsho i.e., Solstad Offsho and Bonheur go up and down completely randomly.

Pair Corralation between Solstad Offsho and Bonheur

Assuming the 90 days trading horizon Solstad Offsho is expected to under-perform the Bonheur. In addition to that, Solstad Offsho is 1.31 times more volatile than Bonheur. It trades about -0.17 of its total potential returns per unit of risk. Bonheur is currently generating about -0.18 per unit of volatility. If you would invest  26,400  in Bonheur on December 2, 2024 and sell it today you would lose (2,850) from holding Bonheur or give up 10.8% of portfolio value over 90 days.

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

Solstad Offsho  vs.  Bonheur

Solstad Offsho

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solstad Offsho has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Bonheur

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bonheur has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Solstad Offsho and Bonheur

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

The idea behind Solstad Offsho and Bonheur 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.