Correlation Between NorAm Drilling and Ultra Clean
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Ultra Clean 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 Ultra Clean 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 Ultra Clean Holdings, you can compare the effects of market volatilities on NorAm Drilling and Ultra Clean 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 Ultra Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Ultra Clean.
Diversification Opportunities for NorAm Drilling and Ultra Clean
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NorAm and Ultra is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Ultra Clean Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultra Clean 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 Ultra Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultra Clean Holdings has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Ultra Clean go up and down completely randomly.
Pair Corralation between NorAm Drilling and Ultra Clean
Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 1.63 times more return on investment than Ultra Clean. However, NorAm Drilling is 1.63 times more volatile than Ultra Clean Holdings. It trades about 0.12 of its potential returns per unit of risk. Ultra Clean Holdings is currently generating about 0.15 per unit of risk. If you would invest 269.00 in NorAm Drilling AS on September 14, 2024 and sell it today you would earn a total of 25.00 from holding NorAm Drilling AS or generate 9.29% 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. Ultra Clean Holdings
Performance |
| Timeline |
| NorAm Drilling AS |
| Ultra Clean Holdings |
NorAm Drilling and Ultra Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NorAm Drilling and Ultra Clean
The main advantage of trading using opposite NorAm Drilling and Ultra Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Ultra Clean 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 Ultra Clean will offset losses from the drop in Ultra Clean's long position.| NorAm Drilling vs. Apple Inc | NorAm Drilling vs. Apple Inc | NorAm Drilling vs. Apple Inc | NorAm Drilling vs. Apple Inc |
| Ultra Clean vs. Applied Materials | Ultra Clean vs. Tokyo Electron Limited | Ultra Clean vs. Superior Plus Corp | Ultra Clean vs. SIVERS SEMICONDUCTORS AB |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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