Correlation Between SOLSTAD OFFSHORE and Genertec Universal

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

By analyzing existing cross correlation between SOLSTAD OFFSHORE NK and Genertec Universal Medical, you can compare the effects of market volatilities on SOLSTAD OFFSHORE and Genertec Universal 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 Genertec Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLSTAD OFFSHORE and Genertec Universal.

Diversification Opportunities for SOLSTAD OFFSHORE and Genertec Universal

-0.15

Correlation Coefficient

SOLSTAD OFFSHORE  Genertec Universal

Good diversification

The 3 months correlation between SOLSTAD and Genertec is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK and Genertec Universal Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genertec Universal 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 NK are associated (or correlated) with Genertec Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genertec Universal has no effect on the direction of SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and Genertec Universal go up and down completely randomly.

Pair Corralation between SOLSTAD OFFSHORE and Genertec Universal

Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to under-perform the Genertec Universal. But the stock apears to be less risky and, when comparing its historical volatility, SOLSTAD OFFSHORE NK is 1.48 times less risky than Genertec Universal. The stock trades about -0.03 of its potential returns per unit of risk. The Genertec Universal Medical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  57.00  in Genertec Universal Medical on December 22, 2024 and sell it today you would earn a total of  9.00  from holding Genertec Universal Medical or generate 15.79% return on investment over 90 days.

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

SOLSTAD OFFSHORE NK  vs.  Genertec Universal Medical

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 nearly stable basic indicators, SOLSTAD OFFSHORE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Genertec Universal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Genertec Universal Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Genertec Universal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOLSTAD OFFSHORE and Genertec Universal

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

The idea behind SOLSTAD OFFSHORE NK and Genertec Universal Medical 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.