Correlation Between Major Drilling and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both Major Drilling and NTG Nordic 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 Major Drilling and NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Major Drilling Group and NTG Nordic Transport, you can compare the effects of market volatilities on Major Drilling and NTG Nordic 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 Major Drilling with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and NTG Nordic.
Diversification Opportunities for Major Drilling and NTG Nordic
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Major and NTG is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and Major Drilling 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 Major Drilling Group are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Major Drilling i.e., Major Drilling and NTG Nordic go up and down completely randomly.
Pair Corralation between Major Drilling and NTG Nordic
Assuming the 90 days horizon Major Drilling Group is expected to under-perform the NTG Nordic. But the stock apears to be less risky and, when comparing its historical volatility, Major Drilling Group is 1.18 times less risky than NTG Nordic. The stock trades about 0.0 of its potential returns per unit of risk. The NTG Nordic Transport is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 3,185 in NTG Nordic Transport on August 25, 2024 and sell it today you would earn a total of 720.00 from holding NTG Nordic Transport or generate 22.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Major Drilling Group vs. NTG Nordic Transport
Performance |
| Timeline |
| Major Drilling Group |
| NTG Nordic Transport |
Major Drilling and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Major Drilling and NTG Nordic
The main advantage of trading using opposite Major Drilling and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.| Major Drilling vs. NTG Nordic Transport | Major Drilling vs. TYSON FOODS A | Major Drilling vs. SENECA FOODS A | Major Drilling vs. Gaztransport Technigaz SA |
| NTG Nordic vs. SINGAPORE POST | NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. NMI Holdings | NTG Nordic vs. Origin Agritech |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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