Correlation Between NorAm Drilling and Autohome ADR
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Autohome ADR 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 Autohome ADR 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 Autohome ADR, you can compare the effects of market volatilities on NorAm Drilling and Autohome ADR 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 Autohome ADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Autohome ADR.
Diversification Opportunities for NorAm Drilling and Autohome ADR
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NorAm and Autohome is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Autohome ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autohome ADR 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 Autohome ADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autohome ADR has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Autohome ADR go up and down completely randomly.
Pair Corralation between NorAm Drilling and Autohome ADR
Assuming the 90 days horizon NorAm Drilling AS is expected to under-perform the Autohome ADR. In addition to that, NorAm Drilling is 2.35 times more volatile than Autohome ADR. It trades about -0.04 of its total potential returns per unit of risk. Autohome ADR is currently generating about 0.06 per unit of volatility. If you would invest 2,560 in Autohome ADR on September 13, 2024 and sell it today you would earn a total of 60.00 from holding Autohome ADR or generate 2.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. Autohome ADR
Performance |
| Timeline |
| NorAm Drilling AS |
| Autohome ADR |
NorAm Drilling and Autohome ADR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Autohome ADR
The main advantage of trading using opposite NorAm Drilling and Autohome ADR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Autohome ADR 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 Autohome ADR will offset losses from the drop in Autohome ADR's long position.| NorAm Drilling vs. PennantPark Investment | NorAm Drilling vs. Gladstone Investment | NorAm Drilling vs. WisdomTree Investments | NorAm Drilling vs. AOYAMA TRADING |
| Autohome ADR vs. Tencent Holdings | Autohome ADR vs. Superior Plus Corp | Autohome ADR vs. SIVERS SEMICONDUCTORS AB | Autohome ADR 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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