Correlation Between Sea1 Offshore and Norske Skog

Can any of the company-specific risk be diversified away by investing in both Sea1 Offshore and Norske Skog 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 Sea1 Offshore and Norske Skog into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sea1 Offshore and Norske Skog Asa, you can compare the effects of market volatilities on Sea1 Offshore and Norske Skog 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 Sea1 Offshore with a short position of Norske Skog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea1 Offshore and Norske Skog.

Diversification Opportunities for Sea1 Offshore and Norske Skog

-0.36

Correlation Coefficient

Sea1 Offshore  Norske Skog

Very good diversification

The 3 months correlation between Sea1 and Norske is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Sea1 Offshore and Norske Skog Asa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norske Skog Asa and Sea1 Offshore 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 Sea1 Offshore are associated (or correlated) with Norske Skog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norske Skog Asa has no effect on the direction of Sea1 Offshore i.e., Sea1 Offshore and Norske Skog go up and down completely randomly.

Pair Corralation between Sea1 Offshore and Norske Skog

Assuming the 90 days trading horizon Sea1 Offshore is expected to generate 0.92 times more return on investment than Norske Skog. However, Sea1 Offshore is 1.09 times less risky than Norske Skog. It trades about 0.09 of its potential returns per unit of risk. Norske Skog Asa is currently generating about -0.08 per unit of risk. If you would invest  2,032  in Sea1 Offshore on October 25, 2024 and sell it today you would earn a total of  363.00  from holding Sea1 Offshore or generate 17.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Sea1 Offshore  vs.  Norske Skog Asa

Sea1 Offshore

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea1 Offshore are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Sea1 Offshore disclosed solid returns over the last few months and may actually be approaching a breakup point.

Norske Skog Asa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Norske Skog Asa 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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Sea1 Offshore and Norske Skog

The main advantage of trading using opposite Sea1 Offshore and Norske Skog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea1 Offshore position performs unexpectedly, Norske Skog 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 Norske Skog will offset losses from the drop in Norske Skog's long position.

The idea behind Sea1 Offshore and Norske Skog Asa 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.