Correlation Between NorAm Drilling and BANK HANDLOWY
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY, you can compare the effects of market volatilities on NorAm Drilling and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and BANK HANDLOWY.
Diversification Opportunities for NorAm Drilling and BANK HANDLOWY
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NorAm and BANK is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and BANK HANDLOWY go up and down completely randomly.
Pair Corralation between NorAm Drilling and BANK HANDLOWY
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 2.3 times more return on investment than BANK HANDLOWY. However, NorAm Drilling is 2.3 times more volatile than BANK HANDLOWY. It trades about 0.06 of its potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.08 per unit of risk. If you would invest 133.00 in NorAm Drilling AS on August 27, 2024 and sell it today you would earn a total of 165.00 from holding NorAm Drilling AS or generate 124.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. BANK HANDLOWY
Performance |
| Timeline |
| NorAm Drilling AS |
| BANK HANDLOWY |
NorAm Drilling and BANK HANDLOWY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and BANK HANDLOWY
The main advantage of trading using opposite NorAm Drilling and BANK HANDLOWY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, BANK HANDLOWY 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 BANK HANDLOWY will offset losses from the drop in BANK HANDLOWY's long position.| NorAm Drilling vs. Universal Insurance Holdings | NorAm Drilling vs. Selective Insurance Group | NorAm Drilling vs. Japan Post Insurance | NorAm Drilling vs. Nufarm Limited |
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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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