Correlation Between NorAm Drilling and FAST RETAIL
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and FAST RETAIL 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 FAST RETAIL 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 FAST RETAIL ADR, you can compare the effects of market volatilities on NorAm Drilling and FAST RETAIL 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 FAST RETAIL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and FAST RETAIL.
Diversification Opportunities for NorAm Drilling and FAST RETAIL
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NorAm and FAST is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and FAST RETAIL ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAST RETAIL ADR 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 FAST RETAIL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAST RETAIL ADR has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and FAST RETAIL go up and down completely randomly.
Pair Corralation between NorAm Drilling and FAST RETAIL
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 2.21 times more return on investment than FAST RETAIL. However, NorAm Drilling is 2.21 times more volatile than FAST RETAIL ADR. It trades about 0.25 of its potential returns per unit of risk. FAST RETAIL ADR is currently generating about -0.16 per unit of risk. If you would invest 242.00 in NorAm Drilling AS on November 2, 2024 and sell it today you would earn a total of 56.00 from holding NorAm Drilling AS or generate 23.14% 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. FAST RETAIL ADR
Performance |
| Timeline |
| NorAm Drilling AS |
| FAST RETAIL ADR |
NorAm Drilling and FAST RETAIL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and FAST RETAIL
The main advantage of trading using opposite NorAm Drilling and FAST RETAIL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, FAST RETAIL 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 FAST RETAIL will offset losses from the drop in FAST RETAIL's long position.| NorAm Drilling vs. Transport International Holdings | NorAm Drilling vs. FIRST SHIP LEASE | NorAm Drilling vs. JD SPORTS FASH | NorAm Drilling vs. SPORTING |
| FAST RETAIL vs. CompuGroup Medical SE | FAST RETAIL vs. MeVis Medical Solutions | FAST RETAIL vs. Siamgas And Petrochemicals | FAST RETAIL vs. SOCKET MOBILE NEW |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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