Correlation Between NorAm Drilling and ITOCHU
Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and ITOCHU 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 ITOCHU 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 ITOCHU, you can compare the effects of market volatilities on NorAm Drilling and ITOCHU 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 ITOCHU. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and ITOCHU.
Diversification Opportunities for NorAm Drilling and ITOCHU
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between NorAm and ITOCHU is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and ITOCHU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ITOCHU 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 ITOCHU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ITOCHU has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and ITOCHU go up and down completely randomly.
Pair Corralation between NorAm Drilling and ITOCHU
Assuming the 90 days horizon NorAm Drilling AS is expected to generate 2.18 times more return on investment than ITOCHU. However, NorAm Drilling is 2.18 times more volatile than ITOCHU. It trades about 0.02 of its potential returns per unit of risk. ITOCHU is currently generating about -0.08 per unit of risk. If you would invest 297.00 in NorAm Drilling AS on December 2, 2024 and sell it today you would lose (2.00) from holding NorAm Drilling AS or give up 0.67% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
NorAm Drilling AS vs. ITOCHU
Performance |
Timeline |
NorAm Drilling AS |
ITOCHU |
NorAm Drilling and ITOCHU Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NorAm Drilling and ITOCHU
The main advantage of trading using opposite NorAm Drilling and ITOCHU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, ITOCHU 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 ITOCHU will offset losses from the drop in ITOCHU's long position.NorAm Drilling vs. FAST RETAIL ADR | NorAm Drilling vs. H2O Retailing | NorAm Drilling vs. Costco Wholesale | NorAm Drilling vs. Retail Estates NV |
ITOCHU vs. REINET INVESTMENTS SCA | ITOCHU vs. AGNC Investment Corp | ITOCHU vs. MidCap Financial Investment | ITOCHU vs. SALESFORCE INC CDR |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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