Correlation Between Solstad Offshore and LANSON-BCC INH

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

Diversification Opportunities for Solstad Offshore and LANSON-BCC INH

0.0

Correlation Coefficient

Solstad Offshore  LANSON-BCC INH

Pay attention - limited upside

The 3 months correlation between Solstad and LANSON-BCC is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and LANSON BCC INH EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LANSON BCC INH 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 LANSON-BCC INH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LANSON BCC INH has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and LANSON-BCC INH go up and down completely randomly.

Pair Corralation between Solstad Offshore and LANSON-BCC INH

If you would invest  337.00  in Solstad Offshore ASA on October 9, 2024 and sell it today you would earn a total of  3.00  from holding Solstad Offshore ASA or generate 0.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Solstad Offshore ASA  vs.  LANSON BCC INH EO

Solstad Offshore ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Solstad Offshore unveiled solid returns over the last few months and may actually be approaching a breakup point.

LANSON BCC INH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LANSON BCC INH EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, LANSON-BCC INH is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Solstad Offshore and LANSON-BCC INH

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

The idea behind Solstad Offshore ASA and LANSON BCC INH EO 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.