Correlation Between Shelf Drilling and Nordhealth
Can any of the company-specific risk be diversified away by investing in both Shelf Drilling and Nordhealth 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 Shelf Drilling and Nordhealth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shelf Drilling and Nordhealth AS, you can compare the effects of market volatilities on Shelf Drilling and Nordhealth 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 Shelf Drilling with a short position of Nordhealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelf Drilling and Nordhealth.
Diversification Opportunities for Shelf Drilling and Nordhealth
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shelf and Nordhealth is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Shelf Drilling and Nordhealth AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordhealth AS and Shelf 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 Shelf Drilling are associated (or correlated) with Nordhealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordhealth AS has no effect on the direction of Shelf Drilling i.e., Shelf Drilling and Nordhealth go up and down completely randomly.
Pair Corralation between Shelf Drilling and Nordhealth
Assuming the 90 days trading horizon Shelf Drilling is expected to under-perform the Nordhealth. But the stock apears to be less risky and, when comparing its historical volatility, Shelf Drilling is 2.34 times less risky than Nordhealth. The stock trades about -0.27 of its potential returns per unit of risk. The Nordhealth AS is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 4,000 in Nordhealth AS on November 11, 2024 and sell it today you would lose (180.00) from holding Nordhealth AS or give up 4.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shelf Drilling vs. Nordhealth AS
Performance |
| Timeline |
| Shelf Drilling |
| Nordhealth AS |
Shelf Drilling and Nordhealth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelf Drilling and Nordhealth
The main advantage of trading using opposite Shelf Drilling and Nordhealth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelf Drilling position performs unexpectedly, Nordhealth 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 Nordhealth will offset losses from the drop in Nordhealth's long position.| Shelf Drilling vs. Odfjell 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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