Correlation Between NorAm Drilling and HomeToGo
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and HomeToGo 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 HomeToGo 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 HomeToGo SE, you can compare the effects of market volatilities on NorAm Drilling and HomeToGo 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 HomeToGo. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and HomeToGo.
Diversification Opportunities for NorAm Drilling and HomeToGo
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and HomeToGo is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and HomeToGo SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HomeToGo SE 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 HomeToGo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HomeToGo SE has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and HomeToGo go up and down completely randomly.
Pair Corralation between NorAm Drilling and HomeToGo
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 1.64 times more return on investment than HomeToGo. However, NorAm Drilling is 1.64 times more volatile than HomeToGo SE. It trades about 0.02 of its potential returns per unit of risk. HomeToGo SE is currently generating about -0.02 per unit of risk. If you would invest 325.00 in NorAm Drilling AS on September 12, 2024 and sell it today you would lose (30.00) from holding NorAm Drilling AS or give up 9.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. HomeToGo SE
Performance |
| Timeline |
| NorAm Drilling AS |
| HomeToGo SE |
NorAm Drilling and HomeToGo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and HomeToGo
The main advantage of trading using opposite NorAm Drilling and HomeToGo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, HomeToGo 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 HomeToGo will offset losses from the drop in HomeToGo's long position.| NorAm Drilling vs. ARDAGH METAL PACDL 0001 | NorAm Drilling vs. Performance Food Group | NorAm Drilling vs. INDOFOOD AGRI RES | NorAm Drilling vs. United Natural Foods |
| HomeToGo vs. Tencent Holdings | HomeToGo vs. Superior Plus Corp | HomeToGo vs. SIVERS SEMICONDUCTORS AB | HomeToGo 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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