Correlation Between NorAm Drilling and Shelf Drilling
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Shelf 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 NorAm Drilling and Shelf Drilling 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 Shelf Drilling, you can compare the effects of market volatilities on NorAm Drilling and Shelf 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 NorAm Drilling with a short position of Shelf Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Shelf Drilling.
Diversification Opportunities for NorAm Drilling and Shelf Drilling
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NorAm and Shelf is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Shelf Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelf Drilling 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 Shelf Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelf Drilling has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Shelf Drilling go up and down completely randomly.
Pair Corralation between NorAm Drilling and Shelf Drilling
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 0.19 times more return on investment than Shelf Drilling. However, NorAm Drilling AS is 5.14 times less risky than Shelf Drilling. It trades about -0.24 of its potential returns per unit of risk. Shelf Drilling is currently generating about -0.17 per unit of risk. If you would invest 3,685 in NorAm Drilling AS on September 15, 2024 and sell it today you would lose (265.00) from holding NorAm Drilling AS or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. Shelf Drilling
Performance |
| Timeline |
| NorAm Drilling AS |
| Shelf Drilling |
NorAm Drilling and Shelf Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Shelf Drilling
The main advantage of trading using opposite NorAm Drilling and Shelf Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Shelf 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 Shelf Drilling will offset losses from the drop in Shelf Drilling's long position.| NorAm Drilling vs. Instabank ASA | NorAm Drilling vs. Lea Bank ASA | NorAm Drilling vs. Aurskog Sparebank | NorAm Drilling vs. Grong Sparebank |
| Shelf Drilling vs. Odfjell Drilling | Shelf Drilling vs. Borr Drilling | Shelf Drilling vs. Solstad Offsho | Shelf Drilling vs. Kongsberg Automotive Holding |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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