Correlation Between NorAm Drilling and Longfor Group
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Longfor 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 Longfor 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 Longfor Group Holdings, you can compare the effects of market volatilities on NorAm Drilling and Longfor 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 Longfor Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Longfor Group.
Diversification Opportunities for NorAm Drilling and Longfor Group
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NorAm and Longfor is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Longfor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Group Holdings 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 Longfor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Group Holdings has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Longfor Group go up and down completely randomly.
Pair Corralation between NorAm Drilling and Longfor Group
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 1.24 times more return on investment than Longfor Group. However, NorAm Drilling is 1.24 times more volatile than Longfor Group Holdings. It trades about 0.01 of its potential returns per unit of risk. Longfor Group Holdings is currently generating about -0.17 per unit of risk. If you would invest 302.00 in NorAm Drilling AS on August 29, 2024 and sell it today you would lose (4.00) from holding NorAm Drilling AS or give up 1.32% 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. Longfor Group Holdings
Performance |
| Timeline |
| NorAm Drilling AS |
| Longfor Group Holdings |
NorAm Drilling and Longfor Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Longfor Group
The main advantage of trading using opposite NorAm Drilling and Longfor Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Longfor 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 Longfor Group will offset losses from the drop in Longfor Group's long position.| NorAm Drilling vs. Air Transport Services | NorAm Drilling vs. Pembina Pipeline Corp | NorAm Drilling vs. NAKED WINES PLC | NorAm Drilling vs. Fukuyama Transporting Co |
| Longfor Group vs. ETFS Coffee ETC | Longfor Group vs. Zijin Mining Group | Longfor Group vs. LGI Homes | Longfor Group vs. GALENA MINING LTD |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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