Correlation Between SeaBird Exploration and Solstad Offsho
Can any of the company-specific risk be diversified away by investing in both SeaBird Exploration 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 SeaBird Exploration and Solstad Offsho into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SeaBird Exploration Plc and Solstad Offsho, you can compare the effects of market volatilities on SeaBird Exploration 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 SeaBird Exploration with a short position of Solstad Offsho. Check out your portfolio center. Please also check ongoing floating volatility patterns of SeaBird Exploration and Solstad Offsho.
Diversification Opportunities for SeaBird Exploration and Solstad Offsho
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SeaBird and Solstad is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SeaBird Exploration Plc and Solstad Offsho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offsho and SeaBird Exploration 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 SeaBird Exploration Plc 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 SeaBird Exploration i.e., SeaBird Exploration and Solstad Offsho go up and down completely randomly.
Pair Corralation between SeaBird Exploration and Solstad Offsho
Assuming the 90 days trading horizon SeaBird Exploration Plc is expected to generate 1.72 times more return on investment than Solstad Offsho. However, SeaBird Exploration is 1.72 times more volatile than Solstad Offsho. It trades about 0.17 of its potential returns per unit of risk. Solstad Offsho is currently generating about 0.28 per unit of risk. If you would invest 694.00 in SeaBird Exploration Plc on June 11, 2025 and sell it today you would earn a total of 214.00 from holding SeaBird Exploration Plc or generate 30.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 82.81% |
| Values | Daily Returns |
SeaBird Exploration Plc vs. Solstad Offsho
Performance |
| Timeline |
| SeaBird Exploration Plc |
Risk-Adjusted Performance
Good
Weak | Strong |
| Solstad Offsho |
SeaBird Exploration and Solstad Offsho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SeaBird Exploration and Solstad Offsho
The main advantage of trading using opposite SeaBird Exploration and Solstad Offsho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SeaBird Exploration 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.| SeaBird Exploration vs. Aker Solutions ASA | SeaBird Exploration vs. Subsea 7 SA | SeaBird Exploration vs. Valaris | SeaBird Exploration vs. Electromagnetic Geoservices ASA |
Check out your portfolio center.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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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