Correlation Between Solstad Offshore and Bellevue Healthcare

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

Diversification Opportunities for Solstad Offshore and Bellevue Healthcare

-0.26

Correlation Coefficient

Solstad Offshore  Bellevue Healthcare

Very good diversification

The 3 months correlation between Solstad and Bellevue is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Bellevue Healthcare Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Healthcare Trust 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 Bellevue Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Healthcare Trust has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Bellevue Healthcare go up and down completely randomly.

Pair Corralation between Solstad Offshore and Bellevue Healthcare

Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 3.43 times more return on investment than Bellevue Healthcare. However, Solstad Offshore is 3.43 times more volatile than Bellevue Healthcare Trust. It trades about 0.05 of its potential returns per unit of risk. Bellevue Healthcare Trust is currently generating about -0.14 per unit of risk. If you would invest  3,422  in Solstad Offshore ASA on September 19, 2024 and sell it today you would earn a total of  248.00  from holding Solstad Offshore ASA or generate 7.25% return on investment over 90 days.

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

Solstad Offshore ASA  vs.  Bellevue Healthcare Trust

Solstad Offshore ASA

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Solstad Offshore may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Bellevue Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bellevue Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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.

Pair Trading with Solstad Offshore and Bellevue Healthcare

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

The idea behind Solstad Offshore ASA and Bellevue Healthcare Trust 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.