Correlation Between Firan Technology and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both Firan Technology and NorAm Drilling 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 Firan Technology and NorAm Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Firan Technology Group and NorAm Drilling AS, you can compare the effects of market volatilities on Firan Technology and NorAm Drilling 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 Firan Technology with a short position of NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Firan Technology and NorAm Drilling.
Diversification Opportunities for Firan Technology and NorAm Drilling
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Firan and NorAm is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Firan Technology Group and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS and Firan Technology 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 Firan Technology Group are associated (or correlated) with NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of Firan Technology i.e., Firan Technology and NorAm Drilling go up and down completely randomly.
Pair Corralation between Firan Technology and NorAm Drilling
Assuming the 90 days trading horizon Firan Technology is expected to generate 1.45 times less return on investment than NorAm Drilling. But when comparing it to its historical volatility, Firan Technology Group is 1.61 times less risky than NorAm Drilling. It trades about 0.13 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 198.00 in NorAm Drilling AS on November 3, 2024 and sell it today you would earn a total of 95.00 from holding NorAm Drilling AS or generate 47.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Firan Technology Group vs. NorAm Drilling AS
Performance |
| Timeline |
| Firan Technology |
| NorAm Drilling AS |
Firan Technology and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Firan Technology and NorAm Drilling
The main advantage of trading using opposite Firan Technology and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Firan Technology position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling's long position.| Firan Technology vs. PLAYTIKA HOLDING DL 01 | Firan Technology vs. Mitsui Chemicals | Firan Technology vs. BROADSTNET LEADL 00025 | Firan Technology vs. TITANIUM TRANSPORTGROUP |
| NorAm Drilling vs. Iridium Communications | NorAm Drilling vs. CarsalesCom | NorAm Drilling vs. Chunghwa Telecom Co | NorAm Drilling vs. Lamar Advertising |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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