Correlation Between Cadeler As and Solstad Offsho

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

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

Diversification Opportunities for Cadeler As and Solstad Offsho

-0.54

Correlation Coefficient

Cadeler As  Solstad Offsho

Excellent diversification

The 3 months correlation between Cadeler and Solstad is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cadeler As and Solstad Offsho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offsho and Cadeler As 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 Cadeler As are associated (or correlated) with Solstad Offsho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offsho has no effect on the direction of Cadeler As i.e., Cadeler As and Solstad Offsho go up and down completely randomly.

Pair Corralation between Cadeler As and Solstad Offsho

Assuming the 90 days trading horizon Cadeler As is expected to under-perform the Solstad Offsho. But the stock apears to be less risky and, when comparing its historical volatility, Cadeler As is 2.3 times less risky than Solstad Offsho. The stock trades about -0.06 of its potential returns per unit of risk. The Solstad Offsho is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  3,395  in Solstad Offsho on September 16, 2024 and sell it today you would earn a total of  479.00  from holding Solstad Offsho or generate 14.11% return on investment over 90 days.

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

Cadeler As  vs.  Solstad Offsho

Cadeler As

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cadeler As has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cadeler As is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Solstad Offsho

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offsho are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Solstad Offsho disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cadeler As and Solstad Offsho

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

The idea behind Cadeler As and Solstad Offsho 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.