Correlation Between Shelf Drilling and Techstep ASA
Can any of the company-specific risk be diversified away by investing in both Shelf Drilling and Techstep ASA 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 Techstep ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shelf Drilling and Techstep ASA, you can compare the effects of market volatilities on Shelf Drilling and Techstep ASA 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 Techstep ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelf Drilling and Techstep ASA.
Diversification Opportunities for Shelf Drilling and Techstep ASA
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shelf and Techstep is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shelf Drilling and Techstep ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techstep ASA 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 Techstep ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techstep ASA has no effect on the direction of Shelf Drilling i.e., Shelf Drilling and Techstep ASA go up and down completely randomly.
Pair Corralation between Shelf Drilling and Techstep ASA
Assuming the 90 days trading horizon Shelf Drilling is expected to under-perform the Techstep ASA. In addition to that, Shelf Drilling is 1.49 times more volatile than Techstep ASA. It trades about -0.13 of its total potential returns per unit of risk. Techstep ASA is currently generating about 0.02 per unit of volatility. If you would invest 1,200 in Techstep ASA on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Techstep ASA or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shelf Drilling vs. Techstep ASA
Performance |
| Timeline |
| Shelf Drilling |
| Techstep ASA |
Shelf Drilling and Techstep ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelf Drilling and Techstep ASA
The main advantage of trading using opposite Shelf Drilling and Techstep ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelf Drilling position performs unexpectedly, Techstep ASA 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 Techstep ASA will offset losses from the drop in Techstep ASA's long position.| Shelf Drilling vs. BW Offshore | Shelf Drilling vs. Subsea 7 SA | Shelf Drilling vs. Elkem ASA | Shelf Drilling vs. Integrated Wind Solutions |
| Techstep ASA vs. Next Biometrics Group | Techstep ASA vs. Goodtech | Techstep ASA vs. Elkem ASA | Techstep ASA vs. Integrated Wind Solutions |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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