Correlation Between NorAm Drilling and TRADEDOUBLER

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

Diversification Opportunities for NorAm Drilling and TRADEDOUBLER

0.0

Correlation Coefficient

NorAm Drilling  TRADEDOUBLER

Pay attention - limited upside

The 3 months correlation between NorAm and TRADEDOUBLER is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and TRADEDOUBLER AB SK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRADEDOUBLER AB SK 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 TRADEDOUBLER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRADEDOUBLER AB SK has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and TRADEDOUBLER go up and down completely randomly.

Pair Corralation between NorAm Drilling and TRADEDOUBLER

Assuming the 90 days horizon NorAm Drilling AS is expected to under-perform the TRADEDOUBLER. But the stock apears to be less risky and, when comparing its historical volatility, NorAm Drilling AS is 1.1 times less risky than TRADEDOUBLER. The stock trades about -0.02 of its potential returns per unit of risk. The TRADEDOUBLER AB SK is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  27.00  in TRADEDOUBLER AB SK on September 13, 2024 and sell it today you would lose (1.00) from holding TRADEDOUBLER AB SK or give up 3.7% of portfolio value over 90 days.

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

NorAm Drilling AS  vs.  TRADEDOUBLER AB SK

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 nearly stable basic indicators, NorAm Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

TRADEDOUBLER AB SK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRADEDOUBLER AB SK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TRADEDOUBLER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NorAm Drilling and TRADEDOUBLER

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

The idea behind NorAm Drilling AS and TRADEDOUBLER AB SK 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.