Correlation Between Solstad Offshore and Here Media

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

Diversification Opportunities for Solstad Offshore and Here Media

1.0

Correlation Coefficient

Solstad Offshore  Here Media

No risk reduction

The 3 months correlation between Solstad and Here is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Here Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Here Media 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 Here Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Here Media has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Here Media go up and down completely randomly.

Pair Corralation between Solstad Offshore and Here Media

Assuming the 90 days horizon Solstad Offshore ASA is expected to generate 1.05 times more return on investment than Here Media. However, Solstad Offshore is 1.05 times more volatile than Here Media. It trades about 0.06 of its potential returns per unit of risk. Here Media is currently generating about 0.06 per unit of risk. If you would invest  151.00  in Solstad Offshore ASA on September 13, 2024 and sell it today you would earn a total of  158.00  from holding Solstad Offshore ASA or generate 104.64% return on investment over 90 days.

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

Solstad Offshore ASA  vs.  Here Media

Solstad Offshore ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Solstad Offshore ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Solstad Offshore is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Here Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Here Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward indicators, Here Media is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Solstad Offshore and Here Media

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

The idea behind Solstad Offshore ASA and Here Media 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.