Correlation Between NorAm Drilling and Sandfire Resources
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Sandfire Resources 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 Sandfire Resources 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 Sandfire Resources Limited, you can compare the effects of market volatilities on NorAm Drilling and Sandfire Resources 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 Sandfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Sandfire Resources.
Diversification Opportunities for NorAm Drilling and Sandfire Resources
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between NorAm and Sandfire is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Sandfire Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandfire Resources 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 Sandfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandfire Resources has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Sandfire Resources go up and down completely randomly.
Pair Corralation between NorAm Drilling and Sandfire Resources
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 4.55 times more return on investment than Sandfire Resources. However, NorAm Drilling is 4.55 times more volatile than Sandfire Resources Limited. It trades about 0.06 of its potential returns per unit of risk. Sandfire Resources Limited is currently generating about 0.06 per unit of risk. If you would invest 105.00 in NorAm Drilling AS on September 13, 2024 and sell it today you would earn a total of 184.00 from holding NorAm Drilling AS or generate 175.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. Sandfire Resources Limited
Performance |
| Timeline |
| NorAm Drilling AS |
| Sandfire Resources |
NorAm Drilling and Sandfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Sandfire Resources
The main advantage of trading using opposite NorAm Drilling and Sandfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Sandfire Resources 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 Sandfire Resources will offset losses from the drop in Sandfire Resources' long position.| NorAm Drilling vs. PennantPark Investment | NorAm Drilling vs. Gladstone Investment | NorAm Drilling vs. WisdomTree Investments | NorAm Drilling vs. AOYAMA TRADING |
| Sandfire Resources vs. Tsingtao Brewery | Sandfire Resources vs. Sixt Leasing SE | Sandfire Resources vs. LANDSEA HOMES P | Sandfire Resources vs. Lendlease Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |