Correlation Between NorAm Drilling and HeidelbergCement
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and HeidelbergCement 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 HeidelbergCement 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 HeidelbergCement AG, you can compare the effects of market volatilities on NorAm Drilling and HeidelbergCement 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 HeidelbergCement. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and HeidelbergCement.
Diversification Opportunities for NorAm Drilling and HeidelbergCement
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between NorAm and HeidelbergCement is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and HeidelbergCement AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HeidelbergCement 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 HeidelbergCement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HeidelbergCement has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and HeidelbergCement go up and down completely randomly.
Pair Corralation between NorAm Drilling and HeidelbergCement
Assuming the 90 days horizon NorAm Drilling is expected to generate 34.35 times less return on investment than HeidelbergCement. In addition to that, NorAm Drilling is 2.73 times more volatile than HeidelbergCement AG. It trades about 0.0 of its total potential returns per unit of risk. HeidelbergCement AG is currently generating about 0.42 per unit of volatility. If you would invest 10,000 in HeidelbergCement AG on August 29, 2024 and sell it today you would earn a total of 1,840 from holding HeidelbergCement AG or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
NorAm Drilling AS vs. HeidelbergCement AG
Performance |
| Timeline |
| NorAm Drilling AS |
| HeidelbergCement |
NorAm Drilling and HeidelbergCement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and HeidelbergCement
The main advantage of trading using opposite NorAm Drilling and HeidelbergCement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, HeidelbergCement 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 HeidelbergCement will offset losses from the drop in HeidelbergCement's long position.| NorAm Drilling vs. WT OFFSHORE | NorAm Drilling vs. Perdoceo Education | NorAm Drilling vs. BW OFFSHORE LTD | NorAm Drilling vs. Laureate Education |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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