Correlation Between NorAm Drilling and Meta Platforms

Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and Meta Platforms 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 Meta Platforms 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 Meta Platforms, you can compare the effects of market volatilities on NorAm Drilling and Meta Platforms 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 Meta Platforms. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and Meta Platforms.

Diversification Opportunities for NorAm Drilling and Meta Platforms

-0.09

Correlation Coefficient

NorAm Drilling  Meta Platforms

Good diversification

The 3 months correlation between NorAm and Meta is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Meta Platforms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Platforms 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 Meta Platforms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Platforms has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Meta Platforms go up and down completely randomly.

Pair Corralation between NorAm Drilling and Meta Platforms

Assuming the 90 days horizon NorAm Drilling is expected to generate 30.56 times less return on investment than Meta Platforms. In addition to that, NorAm Drilling is 2.09 times more volatile than Meta Platforms. It trades about 0.0 of its total potential returns per unit of risk. Meta Platforms is currently generating about 0.12 per unit of volatility. If you would invest  26,249  in Meta Platforms on September 12, 2024 and sell it today you would earn a total of  32,381  from holding Meta Platforms or generate 123.36% return on investment over 90 days.

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

NorAm Drilling AS  vs.  Meta Platforms

NorAm Drilling AS

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NorAm Drilling AS are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NorAm Drilling reported solid returns over the last few months and may actually be approaching a breakup point.

Meta Platforms

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Platforms are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Meta Platforms exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NorAm Drilling and Meta Platforms

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

The idea behind NorAm Drilling AS and Meta Platforms 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..