Correlation Between NorAm Drilling and Deep Value

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

Diversification Opportunities for NorAm Drilling and Deep Value

-0.81

Correlation Coefficient

NorAm Drilling  Deep Value

Pay attention - limited upside

The 3 months correlation between NorAm and Deep is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Deep Value Driller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Value Driller 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 Deep Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Value Driller has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Deep Value go up and down completely randomly.

Pair Corralation between NorAm Drilling and Deep Value

Assuming the 90 days trading horizon NorAm Drilling AS is expected to under-perform the Deep Value. In addition to that, NorAm Drilling is 1.18 times more volatile than Deep Value Driller. It trades about -0.11 of its total potential returns per unit of risk. Deep Value Driller is currently generating about 0.19 per unit of volatility. If you would invest  1,360  in Deep Value Driller on April 24, 2025 and sell it today you would earn a total of  276.00  from holding Deep Value Driller or generate 20.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

NorAm Drilling AS  vs.  Deep Value Driller

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.

Deep Value Driller

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Deep Value Driller are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating fundamental indicators, Deep Value disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NorAm Drilling and Deep Value

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

The idea behind NorAm Drilling AS and Deep Value Driller 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.