Correlation Between Nordic Mining and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both Nordic Mining 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 Nordic Mining and NorAm Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Mining ASA and NorAm Drilling AS, you can compare the effects of market volatilities on Nordic Mining 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 Nordic Mining with a short position of NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Mining and NorAm Drilling.
Diversification Opportunities for Nordic Mining and NorAm Drilling
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordic and NorAm is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Mining ASA 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 Nordic Mining 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 Nordic Mining ASA 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 Nordic Mining i.e., Nordic Mining and NorAm Drilling go up and down completely randomly.
Pair Corralation between Nordic Mining and NorAm Drilling
Assuming the 90 days trading horizon Nordic Mining ASA is expected to generate 1.33 times more return on investment than NorAm Drilling. However, Nordic Mining is 1.33 times more volatile than NorAm Drilling AS. It trades about 0.07 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about -0.01 per unit of risk. If you would invest 1,394 in Nordic Mining ASA on October 25, 2024 and sell it today you would earn a total of 707.00 from holding Nordic Mining ASA or generate 50.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Mining ASA vs. NorAm Drilling AS
Performance |
| Timeline |
| Nordic Mining ASA |
| NorAm Drilling AS |
Nordic Mining and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Mining and NorAm Drilling
The main advantage of trading using opposite Nordic Mining and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Mining 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.| Nordic Mining vs. Clean Seas Seafood | Nordic Mining vs. BW Offshore | Nordic Mining vs. Instabank ASA | Nordic Mining vs. Jaeren Sparebank |
| NorAm Drilling vs. Nordhealth AS | NorAm Drilling vs. Nordic Mining ASA | NorAm Drilling vs. Xplora Technologies As | NorAm Drilling vs. SD Standard 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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