Correlation Between Dolphin Drilling and Arctic Bioscience

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

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

Diversification Opportunities for Dolphin Drilling and Arctic Bioscience

-0.67

Correlation Coefficient

Dolphin Drilling  Arctic Bioscience

Excellent diversification

The 3 months correlation between Dolphin and Arctic is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Drilling AS and Arctic Bioscience AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arctic Bioscience and Dolphin 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 Dolphin Drilling AS are associated (or correlated) with Arctic Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arctic Bioscience has no effect on the direction of Dolphin Drilling i.e., Dolphin Drilling and Arctic Bioscience go up and down completely randomly.

Pair Corralation between Dolphin Drilling and Arctic Bioscience

Assuming the 90 days trading horizon Dolphin Drilling AS is expected to under-perform the Arctic Bioscience. But the stock apears to be less risky and, when comparing its historical volatility, Dolphin Drilling AS is 1.14 times less risky than Arctic Bioscience. The stock trades about -0.07 of its potential returns per unit of risk. The Arctic Bioscience AS is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  183.00  in Arctic Bioscience AS on December 30, 2024 and sell it today you would earn a total of  412.00  from holding Arctic Bioscience AS or generate 225.14% return on investment over 90 days.

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

Dolphin Drilling AS  vs.  Arctic Bioscience AS

Dolphin Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dolphin Drilling AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Arctic Bioscience

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Arctic Bioscience AS are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Arctic Bioscience disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolphin Drilling and Arctic Bioscience

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

The idea behind Dolphin Drilling AS and Arctic Bioscience 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.