Correlation Between Awilco Drilling and North Energy

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Awilco Drilling and North Energy 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 North Energy 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 North Energy ASA, you can compare the effects of market volatilities on Awilco Drilling and North Energy 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 North Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Awilco Drilling and North Energy.

Diversification Opportunities for Awilco Drilling and North Energy

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between Awilco and North is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Awilco Drilling PLC and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy 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 North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Awilco Drilling i.e., Awilco Drilling and North Energy go up and down completely randomly.

Pair Corralation between Awilco Drilling and North Energy

Assuming the 90 days trading horizon Awilco Drilling PLC is expected to generate 2.23 times more return on investment than North Energy. However, Awilco Drilling is 2.23 times more volatile than North Energy ASA. It trades about 0.05 of its potential returns per unit of risk. North Energy ASA is currently generating about 0.05 per unit of risk. If you would invest  1,621  in Awilco Drilling PLC on November 9, 2024 and sell it today you would earn a total of  729.00  from holding Awilco Drilling PLC or generate 44.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Awilco Drilling PLC  vs.  North Energy ASA

 Performance 
       Timeline  
Awilco Drilling PLC 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Awilco Drilling PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Awilco Drilling may actually be approaching a critical reversion point that can send shares even higher in March 2025.
North Energy ASA 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days North Energy ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, North Energy is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Awilco Drilling and North Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Awilco Drilling and North Energy

The main advantage of trading using opposite Awilco Drilling and North Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Awilco Drilling position performs unexpectedly, North Energy 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 North Energy will offset losses from the drop in North Energy's long position.
The idea behind Awilco Drilling PLC and North Energy 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.
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

Other Complementary Tools

Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
Funds Screener
Find actively-traded funds from around the world traded on over 30 global exchanges
Companies Directory
Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance