Correlation Between HEMISPHERE EGY and NORWEGIAN AIR

Can any of the company-specific risk be diversified away by investing in both HEMISPHERE EGY and NORWEGIAN AIR 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 HEMISPHERE EGY and NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HEMISPHERE EGY and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on HEMISPHERE EGY and NORWEGIAN AIR 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 HEMISPHERE EGY with a short position of NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of HEMISPHERE EGY and NORWEGIAN AIR.

Diversification Opportunities for HEMISPHERE EGY and NORWEGIAN AIR

0.13

Correlation Coefficient

HEMISPHERE EGY  NORWEGIAN AIR

Average diversification

The 3 months correlation between HEMISPHERE and NORWEGIAN is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding HEMISPHERE EGY and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT and HEMISPHERE EGY 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 HEMISPHERE EGY are associated (or correlated) with NORWEGIAN AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORWEGIAN AIR SHUT has no effect on the direction of HEMISPHERE EGY i.e., HEMISPHERE EGY and NORWEGIAN AIR go up and down completely randomly.

Pair Corralation between HEMISPHERE EGY and NORWEGIAN AIR

Assuming the 90 days trading horizon HEMISPHERE EGY is expected to generate 0.57 times more return on investment than NORWEGIAN AIR. However, HEMISPHERE EGY is 1.74 times less risky than NORWEGIAN AIR. It trades about 0.13 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about 0.03 per unit of risk. If you would invest  109.00  in HEMISPHERE EGY on September 13, 2024 and sell it today you would earn a total of  15.00  from holding HEMISPHERE EGY or generate 13.76% return on investment over 90 days.

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

HEMISPHERE EGY  vs.  NORWEGIAN AIR SHUT

HEMISPHERE EGY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HEMISPHERE EGY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, HEMISPHERE EGY unveiled solid returns over the last few months and may actually be approaching a breakup point.

NORWEGIAN AIR SHUT

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NORWEGIAN AIR SHUT are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, NORWEGIAN AIR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with HEMISPHERE EGY and NORWEGIAN AIR

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

The idea behind HEMISPHERE EGY and NORWEGIAN AIR SHUT 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.