Correlation Between NorAm Drilling and Instabank ASA
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Instabank 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 NorAm Drilling and Instabank ASA 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 Instabank ASA, you can compare the effects of market volatilities on NorAm Drilling and Instabank 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 NorAm Drilling with a short position of Instabank ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Instabank ASA.
Diversification Opportunities for NorAm Drilling and Instabank ASA
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and Instabank is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank 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 Instabank ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instabank ASA has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Instabank ASA go up and down completely randomly.
Pair Corralation between NorAm Drilling and Instabank ASA
Assuming the 90 days trading horizon NorAm Drilling AS is expected to under-perform the Instabank ASA. In addition to that, NorAm Drilling is 1.44 times more volatile than Instabank ASA. It trades about -0.33 of its total potential returns per unit of risk. Instabank ASA is currently generating about 0.4 per unit of volatility. If you would invest 185.00 in Instabank ASA on September 13, 2024 and sell it today you would earn a total of 15.00 from holding Instabank ASA or generate 8.11% 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. Instabank ASA
Performance |
| Timeline |
| NorAm Drilling AS |
| Instabank ASA |
NorAm Drilling and Instabank ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Instabank ASA
The main advantage of trading using opposite NorAm Drilling and Instabank ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Instabank 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 Instabank ASA will offset losses from the drop in Instabank ASA's long position.| NorAm Drilling vs. Aker ASA | NorAm Drilling vs. Aker Solutions ASA | NorAm Drilling vs. BW Offshore | NorAm Drilling vs. Solstad Offsho |
| Instabank ASA vs. NorAm Drilling AS | Instabank ASA vs. Techstep ASA | Instabank ASA vs. Odfjell Technology | Instabank ASA vs. Nordic Technology Group |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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