Correlation Between Solstad Offshore and Advanced Medical

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

Diversification Opportunities for Solstad Offshore and Advanced Medical

-0.08

Correlation Coefficient

Solstad Offshore  Advanced Medical

Good diversification

The 3 months correlation between Solstad and Advanced is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Advanced Medical Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Medical Sol 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 Advanced Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Medical Sol has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Advanced Medical go up and down completely randomly.

Pair Corralation between Solstad Offshore and Advanced Medical

Assuming the 90 days trading horizon Solstad Offshore is expected to generate 1.45 times less return on investment than Advanced Medical. In addition to that, Solstad Offshore is 1.27 times more volatile than Advanced Medical Solutions. It trades about 0.02 of its total potential returns per unit of risk. Advanced Medical Solutions is currently generating about 0.04 per unit of volatility. If you would invest  224.00  in Advanced Medical Solutions on October 25, 2024 and sell it today you would earn a total of  40.00  from holding Advanced Medical Solutions or generate 17.86% return on investment over 90 days.

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

Solstad Offshore ASA  vs.  Advanced Medical Solutions

Solstad Offshore ASA

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Solstad Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

Advanced Medical Sol

Risk-Adjusted Performance

7 of 100

Modest

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

Pair Trading with Solstad Offshore and Advanced Medical

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

The idea behind Solstad Offshore ASA and Advanced Medical Solutions 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.