Correlation Between Awilco Drilling and Itera ASA
Can any of the company-specific risk be diversified away by investing in both Awilco Drilling and Itera ASA 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 Awilco Drilling and Itera ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Awilco Drilling PLC and Itera ASA, you can compare the effects of market volatilities on Awilco Drilling and Itera ASA 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 Awilco Drilling with a short position of Itera ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and Itera ASA.
Diversification Opportunities for Awilco Drilling and Itera ASA
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Awilco and Itera is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and Itera ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itera ASA and Awilco 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 Awilco Drilling PLC are associated (or correlated) with Itera ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itera ASA has no effect on the direction of Awilco Drilling i.e., Awilco Drilling and Itera ASA go up and down completely randomly.
Pair Corralation between Awilco Drilling and Itera ASA
Assuming the 90 days trading horizon Awilco Drilling PLC is expected to generate 2.03 times more return on investment than Itera ASA. However, Awilco Drilling is 2.03 times more volatile than Itera ASA. It trades about 0.21 of its potential returns per unit of risk. Itera ASA is currently generating about -0.02 per unit of risk. If you would invest 2,180 in Awilco Drilling PLC on October 24, 2024 and sell it today you would earn a total of 300.00 from holding Awilco Drilling PLC or generate 13.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Awilco Drilling PLC vs. Itera ASA
Performance |
| Timeline |
| Awilco Drilling PLC |
| Itera ASA |
Awilco Drilling and Itera ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Awilco Drilling and Itera ASA
The main advantage of trading using opposite Awilco Drilling and Itera ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awilco Drilling position performs unexpectedly, Itera ASA 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 Itera ASA will offset losses from the drop in Itera ASA's long position.The idea behind Awilco Drilling PLC and Itera 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.| Itera ASA vs. Romsdal Sparebank | Itera ASA vs. Helgeland Sparebank | Itera ASA vs. Sparebanken Ost | Itera ASA 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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