Correlation Between NorAm Drilling and Bien Sparebank
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Bien Sparebank 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 NorAm Drilling and Bien Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorAm Drilling AS and Bien Sparebank ASA, you can compare the effects of market volatilities on NorAm Drilling and Bien Sparebank 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 NorAm Drilling with a short position of Bien Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Bien Sparebank.
Diversification Opportunities for NorAm Drilling and Bien Sparebank
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and Bien is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Bien Sparebank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bien Sparebank ASA and NorAm 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 NorAm Drilling AS are associated (or correlated) with Bien Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bien Sparebank ASA has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Bien Sparebank go up and down completely randomly.
Pair Corralation between NorAm Drilling and Bien Sparebank
Assuming the 90 days trading horizon NorAm Drilling AS is expected to under-perform the Bien Sparebank. But the stock apears to be less risky and, when comparing its historical volatility, NorAm Drilling AS is 1.33 times less risky than Bien Sparebank. The stock trades about -0.16 of its potential returns per unit of risk. The Bien Sparebank ASA is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 10,900 in Bien Sparebank ASA on September 1, 2024 and sell it today you would earn a total of 1,500 from holding Bien Sparebank ASA or generate 13.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. Bien Sparebank ASA
Performance |
| Timeline |
| NorAm Drilling AS |
| Bien Sparebank ASA |
NorAm Drilling and Bien Sparebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Bien Sparebank
The main advantage of trading using opposite NorAm Drilling and Bien Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Bien Sparebank 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 Bien Sparebank will offset losses from the drop in Bien Sparebank's long position.| NorAm Drilling vs. Sparebank 1 SMN | NorAm Drilling vs. Jaeren Sparebank | NorAm Drilling vs. Eidesvik Offshore ASA | NorAm Drilling vs. Helgeland Sparebank |
| Bien Sparebank vs. Lea Bank ASA | Bien Sparebank vs. Romerike Sparebank | Bien Sparebank vs. Elkem ASA | Bien Sparebank vs. Integrated Wind Solutions |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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