Correlation Between NorAm Drilling and Subsea 7
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Subsea 7 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 Subsea 7 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 Subsea 7 SA, you can compare the effects of market volatilities on NorAm Drilling and Subsea 7 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 Subsea 7. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Subsea 7.
Diversification Opportunities for NorAm Drilling and Subsea 7
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NorAm and Subsea is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Subsea 7 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Subsea 7 SA 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 Subsea 7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Subsea 7 SA has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Subsea 7 go up and down completely randomly.
Pair Corralation between NorAm Drilling and Subsea 7
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 0.84 times more return on investment than Subsea 7. However, NorAm Drilling AS is 1.19 times less risky than Subsea 7. It trades about -0.06 of its potential returns per unit of risk. Subsea 7 SA is currently generating about -0.05 per unit of risk. If you would invest 3,633 in NorAm Drilling AS on August 29, 2024 and sell it today you would lose (243.00) from holding NorAm Drilling AS or give up 6.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. Subsea 7 SA
Performance |
| Timeline |
| NorAm Drilling AS |
| Subsea 7 SA |
NorAm Drilling and Subsea 7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Subsea 7
The main advantage of trading using opposite NorAm Drilling and Subsea 7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Subsea 7 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 Subsea 7 will offset losses from the drop in Subsea 7'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 |
| Subsea 7 vs. TGS NOPEC Geophysical | Subsea 7 vs. Aker Solutions ASA | Subsea 7 vs. Storebrand ASA | Subsea 7 vs. Dno ASA |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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