Correlation Between NorAm Drilling and Odfjell Technology
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Odfjell Technology 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 Odfjell Technology 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 Odfjell Technology, you can compare the effects of market volatilities on NorAm Drilling and Odfjell Technology 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 Odfjell Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Odfjell Technology.
Diversification Opportunities for NorAm Drilling and Odfjell Technology
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between NorAm and Odfjell is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Odfjell Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Technology 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 Odfjell Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Technology has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Odfjell Technology go up and down completely randomly.
Pair Corralation between NorAm Drilling and Odfjell Technology
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 0.42 times more return on investment than Odfjell Technology. However, NorAm Drilling AS is 2.39 times less risky than Odfjell Technology. It trades about -0.24 of its potential returns per unit of risk. Odfjell Technology is currently generating about -0.11 per unit of risk. If you would invest 3,616 in NorAm Drilling AS on August 29, 2024 and sell it today you would lose (226.00) from holding NorAm Drilling AS or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. Odfjell Technology
Performance |
| Timeline |
| NorAm Drilling AS |
| Odfjell Technology |
NorAm Drilling and Odfjell Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Odfjell Technology
The main advantage of trading using opposite NorAm Drilling and Odfjell Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Odfjell Technology 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 Odfjell Technology will offset losses from the drop in Odfjell Technology's long position.| NorAm Drilling vs. SpareBank 1 stlandet | NorAm Drilling vs. Lea Bank ASA | NorAm Drilling vs. Nordic Mining ASA | NorAm Drilling vs. Morrow Bank ASA |
| Odfjell Technology vs. Borr Drilling | Odfjell Technology vs. Odfjell Drilling | Odfjell Technology vs. Shelf Drilling | Odfjell Technology vs. Northern Ocean |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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