Correlation Between XLMedia PLC and Solstad Offshore

Can any of the company-specific risk be diversified away by investing in both XLMedia PLC and Solstad Offshore 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 XLMedia PLC and Solstad Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between XLMedia PLC and Solstad Offshore ASA, you can compare the effects of market volatilities on XLMedia PLC and Solstad Offshore 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 XLMedia PLC with a short position of Solstad Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and Solstad Offshore.

Diversification Opportunities for XLMedia PLC and Solstad Offshore

0.15

Correlation Coefficient

XLMedia PLC  Solstad Offshore

Average diversification

The 3 months correlation between XLMedia and Solstad is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Solstad Offshore go up and down completely randomly.

Pair Corralation between XLMedia PLC and Solstad Offshore

Assuming the 90 days trading horizon XLMedia PLC is expected to generate 1.57 times more return on investment than Solstad Offshore. However, XLMedia PLC is 1.57 times more volatile than Solstad Offshore ASA. It trades about -0.04 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about -0.09 per unit of risk. If you would invest  1,190  in XLMedia PLC on December 1, 2024 and sell it today you would lose (140.00) from holding XLMedia PLC or give up 11.76% of portfolio value over 90 days.

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

XLMedia PLC  vs.  Solstad Offshore ASA

XLMedia PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with XLMedia PLC and Solstad Offshore

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

The idea behind XLMedia PLC and Solstad Offshore ASA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.