Correlation Between NorAm Drilling and ANTA SPORTS

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

Diversification Opportunities for NorAm Drilling and ANTA SPORTS

-0.72

Correlation Coefficient

NorAm Drilling  ANTA SPORTS

Pay attention - limited upside

The 3 months correlation between NorAm and ANTA is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and ANTA SPORTS PRODUCT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANTA SPORTS PRODUCT 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 ANTA SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANTA SPORTS PRODUCT has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and ANTA SPORTS go up and down completely randomly.

Pair Corralation between NorAm Drilling and ANTA SPORTS

Assuming the 90 days trading horizon NorAm Drilling AS is expected to generate 1.55 times more return on investment than ANTA SPORTS. However, NorAm Drilling is 1.55 times more volatile than ANTA SPORTS PRODUCT. It trades about 0.16 of its potential returns per unit of risk. ANTA SPORTS PRODUCT is currently generating about 0.02 per unit of risk. If you would invest  15.00  in NorAm Drilling AS on October 10, 2024 and sell it today you would earn a total of  263.00  from holding NorAm Drilling AS or generate 1753.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.8%
Values	Daily Returns

NorAm Drilling AS  vs.  ANTA SPORTS PRODUCT

NorAm Drilling AS

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NorAm Drilling AS are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NorAm Drilling unveiled solid returns over the last few months and may actually be approaching a breakup point.

ANTA SPORTS PRODUCT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ANTA SPORTS PRODUCT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NorAm Drilling and ANTA SPORTS

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

The idea behind NorAm Drilling AS and ANTA SPORTS PRODUCT 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.