Correlation Between NorAm Drilling and KION Group
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and KION Group 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 KION Group 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 KION Group AG, you can compare the effects of market volatilities on NorAm Drilling and KION Group 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 KION Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and KION Group.
Diversification Opportunities for NorAm Drilling and KION Group
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NorAm and KION is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and KION Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KION Group AG 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 KION Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KION Group AG has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and KION Group go up and down completely randomly.
Pair Corralation between NorAm Drilling and KION Group
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 1.69 times more return on investment than KION Group. However, NorAm Drilling is 1.69 times more volatile than KION Group AG. It trades about 0.02 of its potential returns per unit of risk. KION Group AG is currently generating about -0.09 per unit of risk. If you would invest 311.00 in NorAm Drilling AS on August 25, 2024 and sell it today you would lose (2.00) from holding NorAm Drilling AS or give up 0.64% 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. KION Group AG
Performance |
| Timeline |
| NorAm Drilling AS |
| KION Group AG |
NorAm Drilling and KION Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and KION Group
The main advantage of trading using opposite NorAm Drilling and KION Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, KION Group 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 KION Group will offset losses from the drop in KION Group's long position.| NorAm Drilling vs. VIRGIN WINES UK | NorAm Drilling vs. Haier Smart Home | NorAm Drilling vs. Neinor Homes SA | NorAm Drilling vs. VIVA WINE GROUP |
| KION Group vs. Cogent Communications Holdings | KION Group vs. Diamyd Medical AB | KION Group vs. Japan Medical Dynamic | KION Group vs. Ribbon Communications |
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 Stocks Directory module to find actively traded stocks across global markets.
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