Correlation Between Solstad Offshore and Wilh Wilhelmsen

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

Diversification Opportunities for Solstad Offshore and Wilh Wilhelmsen

0.76

Correlation Coefficient

Solstad Offshore  Wilh Wilhelmsen

Poor diversification

The 3 months correlation between Solstad and Wilh is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Wilh Wilhelmsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilh Wilhelmsen Holding 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 Wilh Wilhelmsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilh Wilhelmsen Holding has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Wilh Wilhelmsen go up and down completely randomly.

Pair Corralation between Solstad Offshore and Wilh Wilhelmsen

Assuming the 90 days trading horizon Solstad Offshore ASA is expected to under-perform the Wilh Wilhelmsen. In addition to that, Solstad Offshore is 1.25 times more volatile than Wilh Wilhelmsen Holding. It trades about -0.01 of its total potential returns per unit of risk. Wilh Wilhelmsen Holding is currently generating about 0.03 per unit of volatility. If you would invest  3,270  in Wilh Wilhelmsen Holding on December 27, 2024 and sell it today you would earn a total of  60.00  from holding Wilh Wilhelmsen Holding or generate 1.83% 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.  Wilh Wilhelmsen Holding

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.

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wilh Wilhelmsen Holding are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Wilh Wilhelmsen 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 Wilh Wilhelmsen

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

The idea behind Solstad Offshore ASA and Wilh Wilhelmsen Holding 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 CEOs Directory module to screen CEOs from public companies around the world.