Correlation Between Interoil Exploration and Napatech
Can any of the company-specific risk be diversified away by investing in both Interoil Exploration and Napatech 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 Interoil Exploration and Napatech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Interoil Exploration and and Napatech AS, you can compare the effects of market volatilities on Interoil Exploration and Napatech 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 Interoil Exploration with a short position of Napatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interoil Exploration and Napatech.
Diversification Opportunities for Interoil Exploration and Napatech
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Interoil and Napatech is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Interoil Exploration and and Napatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Napatech AS and Interoil Exploration 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 Interoil Exploration and are associated (or correlated) with Napatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Napatech AS has no effect on the direction of Interoil Exploration i.e., Interoil Exploration and Napatech go up and down completely randomly.
Pair Corralation between Interoil Exploration and Napatech
Assuming the 90 days trading horizon Interoil Exploration and is expected to under-perform the Napatech. But the stock apears to be less risky and, when comparing its historical volatility, Interoil Exploration and is 1.2 times less risky than Napatech. The stock trades about -0.36 of its potential returns per unit of risk. The Napatech AS is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,990 in Napatech AS on January 30, 2024 and sell it today you would earn a total of 570.00 from holding Napatech AS or generate 28.64% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Interoil Exploration and vs. Napatech AS
Performance |
Timeline |
Interoil Exploration and |
Napatech AS |
Interoil Exploration and Napatech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Interoil Exploration and Napatech
The main advantage of trading using opposite Interoil Exploration and Napatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Interoil Exploration position performs unexpectedly, Napatech 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 Napatech will offset losses from the drop in Napatech's long position.Interoil Exploration vs. Questerre Energy | Interoil Exploration vs. Dno ASA | Interoil Exploration vs. Panoro Energy ASA | Interoil Exploration vs. Solstad Offsho |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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