Correlation Between SCOTTIE RESOURCES and NorAm Drilling

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

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

Diversification Opportunities for SCOTTIE RESOURCES and NorAm Drilling

0.69

Correlation Coefficient

SCOTTIE RESOURCES  NorAm Drilling

Poor diversification

The 3 months correlation between SCOTTIE and NorAm is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SCOTTIE RESOURCES P 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 SCOTTIE RESOURCES 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 SCOTTIE RESOURCES P 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 SCOTTIE RESOURCES i.e., SCOTTIE RESOURCES and NorAm Drilling go up and down completely randomly.

Pair Corralation between SCOTTIE RESOURCES and NorAm Drilling

If you would invest  10.00  in SCOTTIE RESOURCES P on October 6, 2024 and sell it today you would earn a total of  0.00  from holding SCOTTIE RESOURCES P or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.12%
Values	Daily Returns

SCOTTIE RESOURCES P  vs.  NorAm Drilling AS

SCOTTIE RESOURCES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCOTTIE RESOURCES P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

NorAm Drilling AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NorAm Drilling AS 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.

Pair Trading with SCOTTIE RESOURCES and NorAm Drilling

The main advantage of trading using opposite SCOTTIE RESOURCES and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SCOTTIE RESOURCES 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 SCOTTIE RESOURCES P 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.