Correlation Between NorAm Drilling and Beijing Media
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Beijing Media 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 Beijing Media 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 Beijing Media, you can compare the effects of market volatilities on NorAm Drilling and Beijing Media 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 Beijing Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Beijing Media.
Diversification Opportunities for NorAm Drilling and Beijing Media
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NorAm and Beijing is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Media 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 Beijing Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Media has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Beijing Media go up and down completely randomly.
Pair Corralation between NorAm Drilling and Beijing Media
Assuming the 90 days horizon NorAm Drilling AS is not expected to generate positive returns. However, NorAm Drilling AS is 1.26 times less risky than Beijing Media. It waists most of its returns potential to compensate for thr risk taken. Beijing Media is generating about 0.01 per unit of risk. If you would invest 4.10 in Beijing Media on September 13, 2024 and sell it today you would lose (0.55) from holding Beijing Media or give up 13.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. Beijing Media
Performance |
| Timeline |
| NorAm Drilling AS |
| Beijing Media |
NorAm Drilling and Beijing Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Beijing Media
The main advantage of trading using opposite NorAm Drilling and Beijing Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Beijing Media 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 Beijing Media will offset losses from the drop in Beijing Media's long position.| NorAm Drilling vs. PennantPark Investment | NorAm Drilling vs. Gladstone Investment | NorAm Drilling vs. WisdomTree Investments | NorAm Drilling vs. AOYAMA TRADING |
| Beijing Media vs. Superior Plus Corp | Beijing Media vs. SIVERS SEMICONDUCTORS AB | Beijing Media vs. NorAm Drilling AS | Beijing Media vs. Norsk Hydro ASA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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