Correlation Between NorAm Drilling and Keysight Technologies
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Keysight Technologies 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 NorAm Drilling and Keysight Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NorAm Drilling AS and Keysight Technologies, you can compare the effects of market volatilities on NorAm Drilling and Keysight Technologies 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 NorAm Drilling with a short position of Keysight Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Keysight Technologies.
Diversification Opportunities for NorAm Drilling and Keysight Technologies
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NorAm and Keysight is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and NorAm 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 NorAm Drilling AS are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Keysight Technologies go up and down completely randomly.
Pair Corralation between NorAm Drilling and Keysight Technologies
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 3.34 times more return on investment than Keysight Technologies. However, NorAm Drilling is 3.34 times more volatile than Keysight Technologies. It trades about 0.03 of its potential returns per unit of risk. Keysight Technologies is currently generating about -0.06 per unit of risk. If you would invest 277.00 in NorAm Drilling AS on December 29, 2024 and sell it today you would lose (5.00) from holding NorAm Drilling AS or give up 1.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
NorAm Drilling AS vs. Keysight Technologies
Performance |
Timeline |
NorAm Drilling AS |
Keysight Technologies |
NorAm Drilling and Keysight Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NorAm Drilling and Keysight Technologies
The main advantage of trading using opposite NorAm Drilling and Keysight Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, Keysight Technologies 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 Keysight Technologies will offset losses from the drop in Keysight Technologies' long position.NorAm Drilling vs. Take Two Interactive Software | NorAm Drilling vs. Spirent Communications plc | NorAm Drilling vs. Kingdee International Software | NorAm Drilling vs. USU Software AG |
Keysight Technologies vs. China Foods Limited | Keysight Technologies vs. Moneysupermarket Group PLC | Keysight Technologies vs. Gruppo Mutuionline SpA | Keysight Technologies vs. MONEYSUPERMARKET |
Check out your portfolio center.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 CEOs Directory module to screen CEOs from public companies around the world.
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