Correlation Between NorAm Drilling and COCA COLA
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and COCA COLA 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 COCA COLA 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 COCA A HBC, you can compare the effects of market volatilities on NorAm Drilling and COCA COLA 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 COCA COLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and COCA COLA.
Diversification Opportunities for NorAm Drilling and COCA COLA
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and COCA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and COCA A HBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COCA A HBC 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 COCA COLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COCA A HBC has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and COCA COLA go up and down completely randomly.
Pair Corralation between NorAm Drilling and COCA COLA
Assuming the 90 days horizon NorAm Drilling is expected to generate 2.9 times less return on investment than COCA COLA. In addition to that, NorAm Drilling is 2.71 times more volatile than COCA A HBC. It trades about 0.01 of its total potential returns per unit of risk. COCA A HBC is currently generating about 0.09 per unit of volatility. If you would invest 3,280 in COCA A HBC on August 28, 2024 and sell it today you would earn a total of 100.00 from holding COCA A HBC or generate 3.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. COCA A HBC
Performance |
| Timeline |
| NorAm Drilling AS |
| COCA A HBC |
NorAm Drilling and COCA COLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and COCA COLA
The main advantage of trading using opposite NorAm Drilling and COCA COLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, COCA COLA 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 COCA COLA will offset losses from the drop in COCA COLA'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 |
| COCA COLA vs. Superior Plus Corp | COCA COLA vs. NMI Holdings | COCA COLA vs. Origin Agritech | COCA COLA vs. SIVERS SEMICONDUCTORS AB |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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