Correlation Between REINET INVESTMENTS and Solstad Offshore

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

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

Diversification Opportunities for REINET INVESTMENTS and Solstad Offshore

-0.08

Correlation Coefficient

REINET INVESTMENTS  Solstad Offshore

Good diversification

The 3 months correlation between REINET and Solstad is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA 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 REINET INVESTMENTS 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 REINET INVESTMENTS SCA 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 REINET INVESTMENTS i.e., REINET INVESTMENTS and Solstad Offshore go up and down completely randomly.

Pair Corralation between REINET INVESTMENTS and Solstad Offshore

Assuming the 90 days horizon REINET INVESTMENTS SCA is expected to generate 0.8 times more return on investment than Solstad Offshore. However, REINET INVESTMENTS SCA is 1.26 times less risky than Solstad Offshore. It trades about 0.02 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about -0.01 per unit of risk. If you would invest  2,286  in REINET INVESTMENTS SCA on September 28, 2024 and sell it today you would earn a total of  34.00  from holding REINET INVESTMENTS SCA or generate 1.49% return on investment over 90 days.

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

REINET INVESTMENTS SCA  vs.  Solstad Offshore ASA

REINET INVESTMENTS SCA

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in REINET INVESTMENTS SCA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, REINET INVESTMENTS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Solstad Offshore ASA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 7 (%) 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.

Pair Trading with REINET INVESTMENTS and Solstad Offshore

The main advantage of trading using opposite REINET INVESTMENTS and Solstad Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REINET INVESTMENTS 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 REINET INVESTMENTS SCA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.