Correlation Between Nordic Mining and NorAm Drilling

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

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

Diversification Opportunities for Nordic Mining and NorAm Drilling

-0.75

Correlation Coefficient

Nordic Mining  NorAm Drilling

Pay attention - limited upside

The 3 months correlation between Nordic and NorAm is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Mining ASA and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS and Nordic Mining 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 Nordic Mining ASA are associated (or correlated) with NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of Nordic Mining i.e., Nordic Mining and NorAm Drilling go up and down completely randomly.

Pair Corralation between Nordic Mining and NorAm Drilling

Assuming the 90 days trading horizon Nordic Mining ASA is expected to generate 1.37 times more return on investment than NorAm Drilling. However, Nordic Mining is 1.37 times more volatile than NorAm Drilling AS. It trades about 0.11 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about -0.11 per unit of risk. If you would invest  2,060  in Nordic Mining ASA on April 24, 2025 and sell it today you would earn a total of  350.00  from holding Nordic Mining ASA or generate 16.99% return on investment over 90 days.

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

Nordic Mining ASA  vs.  NorAm Drilling AS

Nordic Mining ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Mining ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, Nordic Mining disclosed solid returns over the last few months and may actually be approaching a breakup point.

NorAm Drilling AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days NorAm Drilling AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in August 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Nordic Mining and NorAm Drilling

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

The idea behind Nordic Mining ASA and NorAm Drilling 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..