Correlation Between Elkem ASA and NRC Group
Can any of the company-specific risk be diversified away by investing in both Elkem ASA and NRC Group 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 Elkem ASA and NRC Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elkem ASA and NRC Group ASA, you can compare the effects of market volatilities on Elkem ASA and NRC Group 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 Elkem ASA with a short position of NRC Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elkem ASA and NRC Group.
Diversification Opportunities for Elkem ASA and NRC Group
Average diversification
The 3 months correlation between Elkem and NRC is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Elkem ASA and NRC Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NRC Group ASA and Elkem 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 Elkem ASA are associated (or correlated) with NRC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NRC Group ASA has no effect on the direction of Elkem ASA i.e., Elkem ASA and NRC Group go up and down completely randomly.
Pair Corralation between Elkem ASA and NRC Group
Assuming the 90 days trading horizon Elkem ASA is expected to generate 20.51 times less return on investment than NRC Group. But when comparing it to its historical volatility, Elkem ASA is 2.53 times less risky than NRC Group. It trades about 0.05 of its potential returns per unit of risk. NRC Group ASA is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 345.00 in NRC Group ASA on September 1, 2024 and sell it today you would earn a total of 135.00 from holding NRC Group ASA or generate 39.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Elkem ASA vs. NRC Group ASA
Performance |
| Timeline |
| Elkem ASA |
| NRC Group ASA |
Elkem ASA and NRC Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elkem ASA and NRC Group
The main advantage of trading using opposite Elkem ASA and NRC Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elkem ASA position performs unexpectedly, NRC Group 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 NRC Group will offset losses from the drop in NRC Group's long position.| Elkem ASA vs. Storebrand ASA | Elkem ASA vs. Yara International ASA | Elkem ASA vs. Lery Seafood Group | Elkem ASA vs. DnB ASA |
| NRC Group vs. Eidesvik Offshore ASA | NRC Group vs. Borgestad A | NRC Group vs. Kitron ASA | NRC Group vs. Havila Shipping 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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