Correlation Between NorAm Drilling and Diamyd Medical
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Diamyd Medical 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 Diamyd Medical 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 Diamyd Medical AB, you can compare the effects of market volatilities on NorAm Drilling and Diamyd Medical 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 Diamyd Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Diamyd Medical.
Diversification Opportunities for NorAm Drilling and Diamyd Medical
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between NorAm and Diamyd is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical AB 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 Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Diamyd Medical go up and down completely randomly.
Pair Corralation between NorAm Drilling and Diamyd Medical
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 2.1 times more return on investment than Diamyd Medical. However, NorAm Drilling is 2.1 times more volatile than Diamyd Medical AB. It trades about 0.06 of its potential returns per unit of risk. Diamyd Medical AB is currently generating about 0.03 per unit of risk. If you would invest 104.00 in NorAm Drilling AS on September 20, 2024 and sell it today you would earn a total of 163.00 from holding NorAm Drilling AS or generate 156.73% 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. Diamyd Medical AB
Performance |
| Timeline |
| NorAm Drilling AS |
| Diamyd Medical AB |
NorAm Drilling and Diamyd Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Diamyd Medical
The main advantage of trading using opposite NorAm Drilling and Diamyd Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Diamyd Medical 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 Diamyd Medical will offset losses from the drop in Diamyd Medical's long position.| NorAm Drilling vs. Astral Foods Limited | NorAm Drilling vs. SENECA FOODS A | NorAm Drilling vs. Tyson Foods | NorAm Drilling vs. NXP Semiconductors NV |
| Diamyd Medical vs. Moderna | Diamyd Medical vs. Superior Plus Corp | Diamyd Medical vs. SIVERS SEMICONDUCTORS AB | Diamyd Medical 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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