Correlation Between Applied Materials and Solstad Offshore

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

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

Diversification Opportunities for Applied Materials and Solstad Offshore

0.0

Correlation Coefficient

Applied Materials  Solstad Offshore

Pay attention - limited upside

The 3 months correlation between Applied and Solstad is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Applied Materials and Solstad Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solstad Offshore ASA and Applied Materials 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 Applied Materials are associated (or correlated) with Solstad Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solstad Offshore ASA has no effect on the direction of Applied Materials i.e., Applied Materials and Solstad Offshore go up and down completely randomly.

Pair Corralation between Applied Materials and Solstad Offshore

Given the investment horizon of 90 days Applied Materials is expected to generate 0.29 times more return on investment than Solstad Offshore. However, Applied Materials is 3.49 times less risky than Solstad Offshore. It trades about 0.16 of its potential returns per unit of risk. Solstad Offshore ASA is currently generating about 0.04 per unit of risk. If you would invest  12,823  in Applied Materials on July 7, 2025 and sell it today you would earn a total of  8,930  from holding Applied Materials or generate 69.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.43%
Values	Daily Returns

Applied Materials  vs.  Solstad Offshore ASA

Applied Materials

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Applied Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Solstad Offshore ASA

Risk-Adjusted Performance

Weakest

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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Applied Materials and Solstad Offshore

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

The idea behind Applied Materials and Solstad Offshore ASA 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.