Correlation Between Solstad Offshore and J+J SNACK

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

Diversification Opportunities for Solstad Offshore and J+J SNACK

0.56

Correlation Coefficient

Solstad Offshore  J+J SNACK

Very weak diversification

The 3 months correlation between Solstad and J+J is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS 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 J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and J+J SNACK go up and down completely randomly.

Pair Corralation between Solstad Offshore and J+J SNACK

Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 4.33 times more return on investment than J+J SNACK. However, Solstad Offshore is 4.33 times more volatile than JJ SNACK FOODS. It trades about 0.07 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about 0.15 per unit of risk. If you would invest  284.00  in Solstad Offshore ASA on September 15, 2024 and sell it today you would earn a total of  40.00  from holding Solstad Offshore ASA or generate 14.08% return on investment over 90 days.

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

Solstad Offshore ASA  vs.  JJ SNACK FOODS

Solstad Offshore ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 5 (%) 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.

JJ SNACK FOODS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, J+J SNACK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Solstad Offshore and J+J SNACK

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

The idea behind Solstad Offshore ASA and JJ SNACK FOODS 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.