Correlation Between North Energy and Norske Skog
Can any of the company-specific risk be diversified away by investing in both North Energy and Norske Skog 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 North Energy and Norske Skog into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North Energy ASA and Norske Skog Asa, you can compare the effects of market volatilities on North Energy and Norske Skog 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 North Energy with a short position of Norske Skog. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Energy and Norske Skog.
Diversification Opportunities for North Energy and Norske Skog
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between North and Norske is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and Norske Skog Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norske Skog Asa and North Energy 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 North Energy ASA are associated (or correlated) with Norske Skog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norske Skog Asa has no effect on the direction of North Energy i.e., North Energy and Norske Skog go up and down completely randomly.
Pair Corralation between North Energy and Norske Skog
Assuming the 90 days trading horizon North Energy ASA is expected to generate 0.32 times more return on investment than Norske Skog. However, North Energy ASA is 3.17 times less risky than Norske Skog. It trades about 0.11 of its potential returns per unit of risk. Norske Skog Asa is currently generating about -0.08 per unit of risk. If you would invest 260.00 in North Energy ASA on August 29, 2024 and sell it today you would earn a total of 10.00 from holding North Energy ASA or generate 3.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North Energy ASA vs. Norske Skog Asa
Performance |
| Timeline |
| North Energy ASA |
| Norske Skog Asa |
North Energy and Norske Skog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North Energy and Norske Skog
The main advantage of trading using opposite North Energy and Norske Skog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North Energy position performs unexpectedly, Norske Skog 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 Norske Skog will offset losses from the drop in Norske Skog's long position.| North Energy vs. Napatech AS | North Energy vs. Polaris Media | North Energy vs. Goodtech | North Energy vs. Grieg Seafood ASA |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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