Correlation Between NorAm Drilling and Hoist Finance
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Hoist Finance 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 Hoist Finance 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 Hoist Finance AB, you can compare the effects of market volatilities on NorAm Drilling and Hoist Finance 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 Hoist Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Hoist Finance.
Diversification Opportunities for NorAm Drilling and Hoist Finance
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and Hoist is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Hoist Finance AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoist Finance AB 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 Hoist Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoist Finance AB has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Hoist Finance go up and down completely randomly.
Pair Corralation between NorAm Drilling and Hoist Finance
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 1.47 times more return on investment than Hoist Finance. However, NorAm Drilling is 1.47 times more volatile than Hoist Finance AB. It trades about 0.24 of its potential returns per unit of risk. Hoist Finance AB is currently generating about -0.01 per unit of risk. If you would invest 240.00 in NorAm Drilling AS on November 7, 2024 and sell it today you would earn a total of 54.00 from holding NorAm Drilling AS or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. Hoist Finance AB
Performance |
| Timeline |
| NorAm Drilling AS |
| Hoist Finance AB |
NorAm Drilling and Hoist Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Hoist Finance
The main advantage of trading using opposite NorAm Drilling and Hoist Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Hoist Finance 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 Hoist Finance will offset losses from the drop in Hoist Finance's long position.| NorAm Drilling vs. Rocket Internet SE | NorAm Drilling vs. Gaztransport Technigaz SA | NorAm Drilling vs. Cogent Communications Holdings | NorAm Drilling vs. Verizon Communications |
| Hoist Finance vs. VIENNA INSURANCE GR | Hoist Finance vs. Scottish Mortgage Investment | Hoist Finance vs. Safety Insurance Group | Hoist Finance vs. Canadian Utilities Limited |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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