Correlation Between Solstad Offshore and Equifax

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

Diversification Opportunities for Solstad Offshore and Equifax

-0.17

Correlation Coefficient

Solstad Offshore  Equifax

Good diversification

The 3 months correlation between Solstad and Equifax is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Equifax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equifax 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 Equifax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equifax has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Equifax go up and down completely randomly.

Pair Corralation between Solstad Offshore and Equifax

Assuming the 90 days trading horizon Solstad Offshore ASA is expected to under-perform the Equifax. In addition to that, Solstad Offshore is 1.08 times more volatile than Equifax. It trades about -0.12 of its total potential returns per unit of risk. Equifax is currently generating about -0.01 per unit of volatility. If you would invest  24,800  in Equifax on September 30, 2024 and sell it today you would lose (200.00) from holding Equifax or give up 0.81% of portfolio value over 90 days.

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

Solstad Offshore ASA  vs.  Equifax

Solstad Offshore ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offshore ASA are ranked lower than 8 (%) 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.

Equifax

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Solstad Offshore and Equifax

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

The idea behind Solstad Offshore ASA and Equifax 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..