Correlation Between Solstad Offshore and BANKINTER ADR

Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and BANKINTER ADR 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 BANKINTER ADR 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 BANKINTER ADR 2007, you can compare the effects of market volatilities on Solstad Offshore and BANKINTER ADR 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 BANKINTER ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and BANKINTER ADR.

Diversification Opportunities for Solstad Offshore and BANKINTER ADR

-0.69

Correlation Coefficient

Solstad Offshore  BANKINTER ADR

Excellent diversification

The 3 months correlation between Solstad and BANKINTER is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and BANKINTER ADR 2007 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANKINTER ADR 2007 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 BANKINTER ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANKINTER ADR 2007 has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and BANKINTER ADR go up and down completely randomly.

Pair Corralation between Solstad Offshore and BANKINTER ADR

Assuming the 90 days trading horizon Solstad Offshore ASA is expected to under-perform the BANKINTER ADR. In addition to that, Solstad Offshore is 1.08 times more volatile than BANKINTER ADR 2007. It trades about -0.02 of its total potential returns per unit of risk. BANKINTER ADR 2007 is currently generating about 0.32 per unit of volatility. If you would invest  720.00  in BANKINTER ADR 2007 on December 30, 2024 and sell it today you would earn a total of  300.00  from holding BANKINTER ADR 2007 or generate 41.67% return on investment over 90 days.

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

Solstad Offshore ASA  vs.  BANKINTER ADR 2007

Solstad Offshore ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solstad Offshore ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Solstad Offshore is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

BANKINTER ADR 2007

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BANKINTER ADR 2007 are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, BANKINTER ADR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solstad Offshore and BANKINTER ADR

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

The idea behind Solstad Offshore ASA and BANKINTER ADR 2007 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.