Correlation Between ConocoPhillips and NORDIC HALIBUT

Can any of the company-specific risk be diversified away by investing in both ConocoPhillips and NORDIC HALIBUT 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 ConocoPhillips and NORDIC HALIBUT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ConocoPhillips and NORDIC HALIBUT AS, you can compare the effects of market volatilities on ConocoPhillips and NORDIC HALIBUT 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 ConocoPhillips with a short position of NORDIC HALIBUT. Check out your portfolio center. Please also check ongoing floating volatility patterns of ConocoPhillips and NORDIC HALIBUT.

Diversification Opportunities for ConocoPhillips and NORDIC HALIBUT

0.11

Correlation Coefficient

ConocoPhillips  NORDIC HALIBUT

Average diversification

The 3 months correlation between ConocoPhillips and NORDIC is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding ConocoPhillips and NORDIC HALIBUT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORDIC HALIBUT AS and ConocoPhillips 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 ConocoPhillips are associated (or correlated) with NORDIC HALIBUT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORDIC HALIBUT AS has no effect on the direction of ConocoPhillips i.e., ConocoPhillips and NORDIC HALIBUT go up and down completely randomly.

Pair Corralation between ConocoPhillips and NORDIC HALIBUT

Assuming the 90 days horizon ConocoPhillips is expected to generate 1.11 times more return on investment than NORDIC HALIBUT. However, ConocoPhillips is 1.11 times more volatile than NORDIC HALIBUT AS. It trades about 0.03 of its potential returns per unit of risk. NORDIC HALIBUT AS is currently generating about 0.01 per unit of risk. If you would invest  9,205  in ConocoPhillips on December 29, 2024 and sell it today you would earn a total of  286.00  from holding ConocoPhillips or generate 3.11% return on investment over 90 days.

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

ConocoPhillips  vs.  NORDIC HALIBUT AS

ConocoPhillips

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ConocoPhillips are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ConocoPhillips is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NORDIC HALIBUT AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NORDIC HALIBUT AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NORDIC HALIBUT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ConocoPhillips and NORDIC HALIBUT

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

The idea behind ConocoPhillips and NORDIC HALIBUT AS 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.