Correlation Between NEL ASA and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both NEL ASA 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 NEL ASA and NorAm Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEL ASA ADR30 and NorAm Drilling AS, you can compare the effects of market volatilities on NEL ASA 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 NEL ASA with a short position of NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEL ASA and NorAm Drilling.
Diversification Opportunities for NEL ASA and NorAm Drilling
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between NEL and NorAm is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding NEL ASA ADR30 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 NEL ASA 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 NEL ASA ADR30 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 NEL ASA i.e., NEL ASA and NorAm Drilling go up and down completely randomly.
Pair Corralation between NEL ASA and NorAm Drilling
Assuming the 90 days trading horizon NEL ASA ADR30 is expected to under-perform the NorAm Drilling. In addition to that, NEL ASA is 1.54 times more volatile than NorAm Drilling AS. It trades about -0.17 of its total potential returns per unit of risk. NorAm Drilling AS is currently generating about -0.03 per unit of volatility. If you would invest 304.00 in NorAm Drilling AS on August 30, 2024 and sell it today you would lose (18.00) from holding NorAm Drilling AS or give up 5.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NEL ASA ADR30 vs. NorAm Drilling AS
Performance |
| Timeline |
| NEL ASA ADR30 |
| NorAm Drilling AS |
NEL ASA and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEL ASA and NorAm Drilling
The main advantage of trading using opposite NEL ASA and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEL ASA 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.| NEL ASA vs. Superior Plus Corp | NEL ASA vs. NMI Holdings | NEL ASA vs. SIVERS SEMICONDUCTORS AB | NEL ASA vs. Talanx AG |
| NorAm Drilling vs. Beazer Homes USA | NorAm Drilling vs. INVITATION HOMES DL | NorAm Drilling vs. NTT DATA | NorAm Drilling vs. MICRONIC MYDATA |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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