Correlation Between Entra ASA and SD Standard

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

By analyzing existing cross correlation between Entra ASA and SD Standard Drilling, you can compare the effects of market volatilities on Entra ASA and SD Standard 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 Entra ASA with a short position of SD Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Entra ASA and SD Standard.

Diversification Opportunities for Entra ASA and SD Standard

-0.5

Correlation Coefficient

Entra ASA  SD Standard

Very good diversification

The 3 months correlation between Entra and SDSD is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Entra ASA and SD Standard Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SD Standard Drilling and Entra ASA 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 Entra ASA are associated (or correlated) with SD Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SD Standard Drilling has no effect on the direction of Entra ASA i.e., Entra ASA and SD Standard go up and down completely randomly.

Pair Corralation between Entra ASA and SD Standard

Assuming the 90 days trading horizon Entra ASA is expected to generate 1.48 times more return on investment than SD Standard. However, Entra ASA is 1.48 times more volatile than SD Standard Drilling. It trades about 0.14 of its potential returns per unit of risk. SD Standard Drilling is currently generating about -0.05 per unit of risk. If you would invest  11,760  in Entra ASA on April 24, 2025 and sell it today you would earn a total of  1,300  from holding Entra ASA or generate 11.05% return on investment over 90 days.

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

Entra ASA  vs.  SD Standard Drilling

Entra ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entra ASA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Entra ASA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

SD Standard Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days SD Standard Drilling has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, SD Standard is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Entra ASA and SD Standard

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

The idea behind Entra ASA and SD Standard Drilling 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.