Correlation Between Nordhealth and Sea1 Offshore
Can any of the company-specific risk be diversified away by investing in both Nordhealth and Sea1 Offshore 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 Nordhealth and Sea1 Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordhealth AS and Sea1 Offshore, you can compare the effects of market volatilities on Nordhealth and Sea1 Offshore 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 Nordhealth with a short position of Sea1 Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordhealth and Sea1 Offshore.
Diversification Opportunities for Nordhealth and Sea1 Offshore
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nordhealth and Sea1 is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nordhealth AS and Sea1 Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea1 Offshore and Nordhealth 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 Nordhealth AS are associated (or correlated) with Sea1 Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea1 Offshore has no effect on the direction of Nordhealth i.e., Nordhealth and Sea1 Offshore go up and down completely randomly.
Pair Corralation between Nordhealth and Sea1 Offshore
Assuming the 90 days trading horizon Nordhealth AS is expected to generate 2.35 times more return on investment than Sea1 Offshore. However, Nordhealth is 2.35 times more volatile than Sea1 Offshore. It trades about 0.19 of its potential returns per unit of risk. Sea1 Offshore is currently generating about 0.29 per unit of risk. If you would invest 3,570 in Nordhealth AS on August 29, 2024 and sell it today you would earn a total of 730.00 from holding Nordhealth AS or generate 20.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordhealth AS vs. Sea1 Offshore
Performance |
| Timeline |
| Nordhealth AS |
| Sea1 Offshore |
Nordhealth and Sea1 Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordhealth and Sea1 Offshore
The main advantage of trading using opposite Nordhealth and Sea1 Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordhealth position performs unexpectedly, Sea1 Offshore 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 Sea1 Offshore will offset losses from the drop in Sea1 Offshore's long position.The idea behind Nordhealth AS and Sea1 Offshore pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Sea1 Offshore vs. Equinor ASA | Sea1 Offshore vs. DnB ASA | Sea1 Offshore vs. Aker BP ASA | Sea1 Offshore vs. Telenor 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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