Correlation Between SOLSTAD OFFSHORE and Microsoft

Can any of the company-specific risk be diversified away by investing in both SOLSTAD OFFSHORE and Microsoft 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 Microsoft 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 Microsoft, you can compare the effects of market volatilities on SOLSTAD OFFSHORE and Microsoft 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 Microsoft. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLSTAD OFFSHORE and Microsoft.

Diversification Opportunities for SOLSTAD OFFSHORE and Microsoft

0.78

Correlation Coefficient

SOLSTAD OFFSHORE  Microsoft

Poor diversification

The 3 months correlation between SOLSTAD and Microsoft is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and Microsoft go up and down completely randomly.

Pair Corralation between SOLSTAD OFFSHORE and Microsoft

Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to generate 1.23 times more return on investment than Microsoft. However, SOLSTAD OFFSHORE is 1.23 times more volatile than Microsoft. It trades about -0.01 of its potential returns per unit of risk. Microsoft is currently generating about -0.1 per unit of risk. If you would invest  331.00  in SOLSTAD OFFSHORE NK on December 28, 2024 and sell it today you would lose (7.00) from holding SOLSTAD OFFSHORE NK or give up 2.11% of portfolio value over 90 days.

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

SOLSTAD OFFSHORE NK  vs.  Microsoft

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 latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with SOLSTAD OFFSHORE and Microsoft

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

The idea behind SOLSTAD OFFSHORE NK and Microsoft 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..