Correlation Between NorAm Drilling and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Eidesvik Offshore 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 Eidesvik Offshore 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 Eidesvik Offshore ASA, you can compare the effects of market volatilities on NorAm Drilling and Eidesvik Offshore 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 Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Eidesvik Offshore.
Diversification Opportunities for NorAm Drilling and Eidesvik Offshore
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NorAm and Eidesvik is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA 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 Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between NorAm Drilling and Eidesvik Offshore
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 2.58 times more return on investment than Eidesvik Offshore. However, NorAm Drilling is 2.58 times more volatile than Eidesvik Offshore ASA. It trades about 0.13 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about 0.04 per unit of risk. If you would invest 262.00 in NorAm Drilling AS on September 3, 2024 and sell it today you would earn a total of 26.00 from holding NorAm Drilling AS or generate 9.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NorAm Drilling AS vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| NorAm Drilling AS |
| Eidesvik Offshore ASA |
NorAm Drilling and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Eidesvik Offshore
The main advantage of trading using opposite NorAm Drilling and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Eidesvik Offshore 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.| NorAm Drilling vs. JIAHUA STORES | NorAm Drilling vs. MARKET VECTR RETAIL | NorAm Drilling vs. FEMALE HEALTH | NorAm Drilling vs. PICKN PAY STORES |
| Eidesvik Offshore vs. SCANDMEDICAL SOLDK 040 | Eidesvik Offshore vs. MEDICAL FACILITIES NEW | Eidesvik Offshore vs. Uber Technologies | Eidesvik Offshore vs. PKSHA TECHNOLOGY INC |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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