Correlation Between Solstad Offsho and Golden Energy

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

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

Diversification Opportunities for Solstad Offsho and Golden Energy

-0.81

Correlation Coefficient

Solstad Offsho  Golden Energy

Pay attention - limited upside

The 3 months correlation between Solstad and Golden is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offsho and Golden Energy Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Energy Offshore and Solstad Offsho 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 Offsho are associated (or correlated) with Golden Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Energy Offshore has no effect on the direction of Solstad Offsho i.e., Solstad Offsho and Golden Energy go up and down completely randomly.

Pair Corralation between Solstad Offsho and Golden Energy

Assuming the 90 days trading horizon Solstad Offsho is expected to generate 0.61 times more return on investment than Golden Energy. However, Solstad Offsho is 1.64 times less risky than Golden Energy. It trades about 0.07 of its potential returns per unit of risk. Golden Energy Offshore is currently generating about -0.02 per unit of risk. 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	Significant
Accuracy	100.0%
Values	Daily Returns

Solstad Offsho  vs.  Golden Energy Offshore

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.

Golden Energy Offshore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Energy Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Solstad Offsho and Golden Energy

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

The idea behind Solstad Offsho and Golden Energy Offshore 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.