Correlation Between NorAm Drilling and PF Bakkafrost
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and PF Bakkafrost 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 PF Bakkafrost 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 PF Bakkafrost, you can compare the effects of market volatilities on NorAm Drilling and PF Bakkafrost 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 PF Bakkafrost. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and PF Bakkafrost.
Diversification Opportunities for NorAm Drilling and PF Bakkafrost
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NorAm and 6BF is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and PF Bakkafrost in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PF Bakkafrost 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 PF Bakkafrost. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PF Bakkafrost has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and PF Bakkafrost go up and down completely randomly.
Pair Corralation between NorAm Drilling and PF Bakkafrost
Assuming the 90 days horizon NorAm Drilling AS is expected to under-perform the PF Bakkafrost. But the stock apears to be less risky and, when comparing its historical volatility, NorAm Drilling AS is 1.24 times less risky than PF Bakkafrost. The stock trades about -0.37 of its potential returns per unit of risk. The PF Bakkafrost is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,455 in PF Bakkafrost on September 19, 2024 and sell it today you would earn a total of 155.00 from holding PF Bakkafrost or generate 2.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. PF Bakkafrost
Performance |
| Timeline |
| NorAm Drilling AS |
| PF Bakkafrost |
NorAm Drilling and PF Bakkafrost Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and PF Bakkafrost
The main advantage of trading using opposite NorAm Drilling and PF Bakkafrost positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, PF Bakkafrost 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 PF Bakkafrost will offset losses from the drop in PF Bakkafrost's long position.| NorAm Drilling vs. Japan Medical Dynamic | NorAm Drilling vs. Wizz Air Holdings | NorAm Drilling vs. WIZZ AIR HLDGUNSPADR4 | NorAm Drilling vs. CVR Medical Corp |
| PF Bakkafrost vs. Metro AG | PF Bakkafrost vs. Superior Plus Corp | PF Bakkafrost vs. SIVERS SEMICONDUCTORS AB | PF Bakkafrost vs. NorAm Drilling AS |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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