Correlation Between Arendals Fossekompani and Dolphin Drilling
Can any of the company-specific risk be diversified away by investing in both Arendals Fossekompani and Dolphin 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 Arendals Fossekompani and Dolphin Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arendals Fossekompani ASA and Dolphin Drilling AS, you can compare the effects of market volatilities on Arendals Fossekompani and Dolphin 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 Arendals Fossekompani with a short position of Dolphin Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arendals Fossekompani and Dolphin Drilling.
Diversification Opportunities for Arendals Fossekompani and Dolphin Drilling
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Arendals and Dolphin is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Arendals Fossekompani ASA and Dolphin Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Drilling and Arendals Fossekompani 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 Arendals Fossekompani ASA are associated (or correlated) with Dolphin Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Drilling has no effect on the direction of Arendals Fossekompani i.e., Arendals Fossekompani and Dolphin Drilling go up and down completely randomly.
Pair Corralation between Arendals Fossekompani and Dolphin Drilling
Assuming the 90 days trading horizon Arendals Fossekompani ASA is expected to under-perform the Dolphin Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Arendals Fossekompani ASA is 2.8 times less risky than Dolphin Drilling. The stock trades about -0.16 of its potential returns per unit of risk. The Dolphin Drilling AS is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 363.00 in Dolphin Drilling AS on October 23, 2024 and sell it today you would lose (3.00) from holding Dolphin Drilling AS or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.12% |
| Values | Daily Returns |
Arendals Fossekompani ASA vs. Dolphin Drilling AS
Performance |
| Timeline |
| Arendals Fossekompani ASA |
| Dolphin Drilling |
Arendals Fossekompani and Dolphin Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arendals Fossekompani and Dolphin Drilling
The main advantage of trading using opposite Arendals Fossekompani and Dolphin Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arendals Fossekompani position performs unexpectedly, Dolphin 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 Dolphin Drilling will offset losses from the drop in Dolphin Drilling's long position.| Arendals Fossekompani vs. AF Gruppen ASA | Arendals Fossekompani vs. Aker ASA | Arendals Fossekompani vs. Kitron ASA | Arendals Fossekompani vs. Kongsberg Gruppen ASA |
| Dolphin Drilling vs. Deep Value Driller | Dolphin Drilling vs. Odfjell Drilling | Dolphin Drilling vs. NorAm Drilling AS | Dolphin Drilling vs. SD Standard Drilling |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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