Correlation Between Siamgas and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both Siamgas 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 Siamgas and NorAm Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Siamgas And Petrochemicals and NorAm Drilling AS, you can compare the effects of market volatilities on Siamgas 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 Siamgas with a short position of NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siamgas and NorAm Drilling.
Diversification Opportunities for Siamgas and NorAm Drilling
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Siamgas and NorAm is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Siamgas And Petrochemicals 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 Siamgas 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 Siamgas And Petrochemicals 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 Siamgas i.e., Siamgas and NorAm Drilling go up and down completely randomly.
Pair Corralation between Siamgas and NorAm Drilling
Assuming the 90 days trading horizon Siamgas is expected to generate 1.18 times less return on investment than NorAm Drilling. But when comparing it to its historical volatility, Siamgas And Petrochemicals is 1.6 times less risky than NorAm Drilling. It trades about 0.01 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 302.00 in NorAm Drilling AS on August 27, 2024 and sell it today you would lose (4.00) from holding NorAm Drilling AS or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Siamgas And Petrochemicals vs. NorAm Drilling AS
Performance |
| Timeline |
| Siamgas And Petroche |
| NorAm Drilling AS |
Siamgas and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Siamgas and NorAm Drilling
The main advantage of trading using opposite Siamgas and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siamgas 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.The idea behind Siamgas And Petrochemicals and NorAm Drilling AS 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.| NorAm Drilling vs. Universal Insurance Holdings | NorAm Drilling vs. Selective Insurance Group | NorAm Drilling vs. Japan Post Insurance | NorAm Drilling vs. Nufarm Limited |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |