Correlation Between Solstad Offshore and DATAGROUP

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

Diversification Opportunities for Solstad Offshore and DATAGROUP

0.75

Correlation Coefficient

Solstad Offshore  DATAGROUP

Poor diversification

The 3 months correlation between Solstad and DATAGROUP is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and DATAGROUP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATAGROUP SE 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 DATAGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATAGROUP SE has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and DATAGROUP go up and down completely randomly.

Pair Corralation between Solstad Offshore and DATAGROUP

Assuming the 90 days trading horizon Solstad Offshore ASA is expected to under-perform the DATAGROUP. In addition to that, Solstad Offshore is 1.27 times more volatile than DATAGROUP SE. It trades about -0.13 of its total potential returns per unit of risk. DATAGROUP SE is currently generating about 0.11 per unit of volatility. If you would invest  4,435  in DATAGROUP SE on September 26, 2024 and sell it today you would earn a total of  190.00  from holding DATAGROUP SE or generate 4.28% return on investment over 90 days.

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

Solstad Offshore ASA  vs.  DATAGROUP SE

Solstad Offshore ASA

Risk-Adjusted Performance

9 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 9 (%) 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.

DATAGROUP SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DATAGROUP SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical indicators, DATAGROUP unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solstad Offshore and DATAGROUP

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

The idea behind Solstad Offshore ASA and DATAGROUP SE 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.

Check out your portfolio center.

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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.