Correlation Between NorAm Drilling and Lea Bank
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Lea Bank 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 Lea Bank 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 Lea Bank ASA, you can compare the effects of market volatilities on NorAm Drilling and Lea Bank 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 Lea Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Lea Bank.
Diversification Opportunities for NorAm Drilling and Lea Bank
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and Lea is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Lea Bank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lea Bank 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 Lea Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lea Bank ASA has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Lea Bank go up and down completely randomly.
Pair Corralation between NorAm Drilling and Lea Bank
Assuming the 90 days trading horizon NorAm Drilling AS is expected to under-perform the Lea Bank. But the stock apears to be less risky and, when comparing its historical volatility, NorAm Drilling AS is 1.3 times less risky than Lea Bank. The stock trades about -0.04 of its potential returns per unit of risk. The Lea Bank ASA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 727.00 in Lea Bank ASA on September 1, 2024 and sell it today you would earn a total of 243.00 from holding Lea Bank ASA or generate 33.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. Lea Bank ASA
Performance |
| Timeline |
| NorAm Drilling AS |
| Lea Bank ASA |
NorAm Drilling and Lea Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Lea Bank
The main advantage of trading using opposite NorAm Drilling and Lea Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Lea Bank 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 Lea Bank will offset losses from the drop in Lea Bank'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 |
| Lea Bank vs. Grong Sparebank | Lea Bank vs. Austevoll Seafood ASA | Lea Bank vs. SD Standard Drilling | Lea Bank vs. NorAm Drilling AS |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |