Correlation Between Solstad Offshore and Hyundai

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

Diversification Opportunities for Solstad Offshore and Hyundai

-0.42

Correlation Coefficient

Solstad Offshore  Hyundai

Very good diversification

The 3 months correlation between Solstad and Hyundai is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Hyundai Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Motor 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 Hyundai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Motor has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Hyundai go up and down completely randomly.

Pair Corralation between Solstad Offshore and Hyundai

Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 1.61 times more return on investment than Hyundai. However, Solstad Offshore is 1.61 times more volatile than Hyundai Motor. It trades about 0.11 of its potential returns per unit of risk. Hyundai Motor is currently generating about -0.13 per unit of risk. If you would invest  259.00  in Solstad Offshore ASA on September 26, 2024 and sell it today you would earn a total of  68.00  from holding Solstad Offshore ASA or generate 26.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.88%
Values	Daily Returns

Solstad Offshore ASA  vs.  Hyundai Motor

Solstad Offshore ASA

Risk-Adjusted Performance

9 of 100

OK

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.

Hyundai Motor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hyundai Motor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Solstad Offshore and Hyundai

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

The idea behind Solstad Offshore ASA and Hyundai Motor 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..