Correlation Between Endur ASA and Solstad Offsho

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

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

Diversification Opportunities for Endur ASA and Solstad Offsho

0.74

Correlation Coefficient

Endur ASA  Solstad Offsho

Poor diversification

The 3 months correlation between Endur and Solstad is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Endur ASA and Solstad Offsho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offsho and Endur ASA 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 Endur ASA 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 Endur ASA i.e., Endur ASA and Solstad Offsho go up and down completely randomly.

Pair Corralation between Endur ASA and Solstad Offsho

Assuming the 90 days trading horizon Endur ASA is expected to generate 3.3 times less return on investment than Solstad Offsho. But when comparing it to its historical volatility, Endur ASA is 1.19 times less risky than Solstad Offsho. It trades about 0.11 of its potential returns per unit of risk. Solstad Offsho is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  4,010  in Solstad Offsho on February 22, 2024 and sell it today you would earn a total of  500.00  from holding Solstad Offsho or generate 12.47% return on investment over 90 days.

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

Endur ASA  vs.  Solstad Offsho

Endur ASA

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Endur ASA are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Endur ASA displayed solid returns over the last few months and may actually be approaching a breakup point.

Solstad Offsho

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solstad Offsho are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Solstad Offsho disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Endur ASA and Solstad Offsho

The main advantage of trading using opposite Endur ASA and Solstad Offsho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endur ASA 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 Endur ASA 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.