Correlation Between Nordic Halibut and Deep Value

Can any of the company-specific risk be diversified away by investing in both Nordic Halibut and Deep Value 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 Nordic Halibut and Deep Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nordic Halibut AS and Deep Value Driller, you can compare the effects of market volatilities on Nordic Halibut and Deep Value 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 Nordic Halibut with a short position of Deep Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Halibut and Deep Value.

Diversification Opportunities for Nordic Halibut and Deep Value

0.2

Correlation Coefficient

Nordic Halibut  Deep Value

Modest diversification

The 3 months correlation between Nordic and Deep is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Halibut AS and Deep Value Driller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Value Driller and Nordic Halibut 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 Nordic Halibut AS are associated (or correlated) with Deep Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Value Driller has no effect on the direction of Nordic Halibut i.e., Nordic Halibut and Deep Value go up and down completely randomly.

Pair Corralation between Nordic Halibut and Deep Value

Assuming the 90 days trading horizon Nordic Halibut AS is expected to under-perform the Deep Value. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Halibut AS is 2.73 times less risky than Deep Value. The stock trades about -0.03 of its potential returns per unit of risk. The Deep Value Driller is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,477  in Deep Value Driller on December 20, 2024 and sell it today you would earn a total of  23.00  from holding Deep Value Driller or generate 1.56% return on investment over 90 days.

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

Nordic Halibut AS  vs.  Deep Value Driller

Nordic Halibut AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordic Halibut AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Nordic Halibut is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Deep Value Driller

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Deep Value Driller are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Deep Value may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nordic Halibut and Deep Value

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

The idea behind Nordic Halibut AS and Deep Value Driller 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.