Correlation Between Nel ASA and Norbit ASA
Can any of the company-specific risk be diversified away by investing in both Nel ASA and Norbit 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 Nel ASA and Norbit ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nel ASA and Norbit ASA, you can compare the effects of market volatilities on Nel ASA and Norbit 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 Nel ASA with a short position of Norbit ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nel ASA and Norbit ASA.
Diversification Opportunities for Nel ASA and Norbit ASA
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nel and Norbit is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and Norbit ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norbit ASA 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 are associated (or correlated) with Norbit ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norbit ASA has no effect on the direction of Nel ASA i.e., Nel ASA and Norbit ASA go up and down completely randomly.
Pair Corralation between Nel ASA and Norbit ASA
Assuming the 90 days trading horizon Nel ASA is expected to under-perform the Norbit ASA. In addition to that, Nel ASA is 2.03 times more volatile than Norbit ASA. It trades about -0.22 of its total potential returns per unit of risk. Norbit ASA is currently generating about 0.06 per unit of volatility. If you would invest 9,040 in Norbit ASA on September 2, 2024 and sell it today you would earn a total of 590.00 from holding Norbit ASA or generate 6.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nel ASA vs. Norbit ASA
Performance |
| Timeline |
| Nel ASA |
| Norbit ASA |
Nel ASA and Norbit ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nel ASA and Norbit ASA
The main advantage of trading using opposite Nel ASA and Norbit ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nel ASA position performs unexpectedly, Norbit 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 Norbit ASA will offset losses from the drop in Norbit ASA's long position.The idea behind Nel ASA and Norbit 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.| Norbit ASA vs. Lery Seafood Group | Norbit ASA vs. Techstep ASA | Norbit ASA vs. Awilco Drilling PLC | Norbit ASA vs. Shelf 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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