Correlation Between ACCSYS TECHPLC and NorAm Drilling

Can any of the company-specific risk be diversified away by investing in both ACCSYS TECHPLC and NorAm Drilling 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 ACCSYS TECHPLC and NorAm Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ACCSYS TECHPLC EO and NorAm Drilling AS, you can compare the effects of market volatilities on ACCSYS TECHPLC and NorAm Drilling 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 ACCSYS TECHPLC with a short position of NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of ACCSYS TECHPLC and NorAm Drilling.

Diversification Opportunities for ACCSYS TECHPLC and NorAm Drilling

-0.58

Correlation Coefficient

ACCSYS TECHPLC  NorAm Drilling

Excellent diversification

The 3 months correlation between ACCSYS and NorAm is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ACCSYS TECHPLC EO and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS and ACCSYS TECHPLC 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 ACCSYS TECHPLC EO are associated (or correlated) with NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of ACCSYS TECHPLC i.e., ACCSYS TECHPLC and NorAm Drilling go up and down completely randomly.

Pair Corralation between ACCSYS TECHPLC and NorAm Drilling

Assuming the 90 days horizon ACCSYS TECHPLC EO is expected to under-perform the NorAm Drilling. But the stock apears to be less risky and, when comparing its historical volatility, ACCSYS TECHPLC EO is 1.56 times less risky than NorAm Drilling. The stock trades about -0.05 of its potential returns per unit of risk. The NorAm Drilling AS is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  166.00  in NorAm Drilling AS on September 29, 2024 and sell it today you would earn a total of  109.00  from holding NorAm Drilling AS or generate 65.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

ACCSYS TECHPLC EO  vs.  NorAm Drilling AS

ACCSYS TECHPLC EO

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ACCSYS TECHPLC EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NorAm Drilling AS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NorAm Drilling AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NorAm Drilling unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACCSYS TECHPLC and NorAm Drilling

The main advantage of trading using opposite ACCSYS TECHPLC and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ACCSYS TECHPLC position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling's long position.

The idea behind ACCSYS TECHPLC EO and NorAm Drilling AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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.