Correlation Between SOLSTAD OFFSHORE and ScanSource

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

Diversification Opportunities for SOLSTAD OFFSHORE and ScanSource

0.66

Correlation Coefficient

SOLSTAD OFFSHORE  ScanSource

Poor diversification

The 3 months correlation between SOLSTAD and ScanSource is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and ScanSource go up and down completely randomly.

Pair Corralation between SOLSTAD OFFSHORE and ScanSource

Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to under-perform the ScanSource. In addition to that, SOLSTAD OFFSHORE is 1.16 times more volatile than ScanSource. It trades about -0.07 of its total potential returns per unit of risk. ScanSource is currently generating about -0.04 per unit of volatility. If you would invest  4,740  in ScanSource on September 29, 2024 and sell it today you would lose (100.00) from holding ScanSource 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.  ScanSource

SOLSTAD OFFSHORE

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SOLSTAD OFFSHORE NK are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SOLSTAD OFFSHORE reported solid returns over the last few months and may actually be approaching a breakup point.

ScanSource

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ScanSource may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with SOLSTAD OFFSHORE and ScanSource

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

The idea behind SOLSTAD OFFSHORE NK and ScanSource 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.