Correlation Between Awilco Drilling and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Awilco Drilling and Nordic Semiconductor 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 Nordic Semiconductor 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 Nordic Semiconductor ASA, you can compare the effects of market volatilities on Awilco Drilling and Nordic Semiconductor 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 Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and Nordic Semiconductor.
Diversification Opportunities for Awilco Drilling and Nordic Semiconductor
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Awilco and Nordic is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor 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 Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Awilco Drilling i.e., Awilco Drilling and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Awilco Drilling and Nordic Semiconductor
Assuming the 90 days trading horizon Awilco Drilling PLC is expected to generate 17.51 times more return on investment than Nordic Semiconductor. However, Awilco Drilling is 17.51 times more volatile than Nordic Semiconductor ASA. It trades about 0.06 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.01 per unit of risk. If you would invest 127.00 in Awilco Drilling PLC on September 2, 2024 and sell it today you would earn a total of 1,983 from holding Awilco Drilling PLC or generate 1561.42% 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. Nordic Semiconductor ASA
Performance |
| Timeline |
| Awilco Drilling PLC |
| Nordic Semiconductor ASA |
Awilco Drilling and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Awilco Drilling and Nordic Semiconductor
The main advantage of trading using opposite Awilco Drilling and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awilco Drilling position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| Awilco Drilling vs. DnB ASA | Awilco Drilling vs. Mowi ASA | Awilco Drilling vs. Yara International ASA | Awilco Drilling vs. Telenor ASA |
| Nordic Semiconductor vs. Storebrand ASA | Nordic Semiconductor vs. DnB ASA | Nordic Semiconductor vs. Telenor ASA | Nordic Semiconductor vs. Kongsberg Gruppen ASA |
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.
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