Correlation Between North Energy and Electromagnetic Geoservices

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

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

Diversification Opportunities for North Energy and Electromagnetic Geoservices

0.06

Correlation Coefficient

North Energy  Electromagnetic Geoservices

Significant diversification

The 3 months correlation between North and Electromagnetic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and Electromagnetic Geoservices AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electromagnetic Geoservices and North Energy 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 North Energy ASA are associated (or correlated) with Electromagnetic Geoservices. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electromagnetic Geoservices has no effect on the direction of North Energy i.e., North Energy and Electromagnetic Geoservices go up and down completely randomly.

Pair Corralation between North Energy and Electromagnetic Geoservices

Assuming the 90 days trading horizon North Energy ASA is expected to generate 0.43 times more return on investment than Electromagnetic Geoservices. However, North Energy ASA is 2.3 times less risky than Electromagnetic Geoservices. It trades about 0.09 of its potential returns per unit of risk. Electromagnetic Geoservices ASA is currently generating about -0.01 per unit of risk. If you would invest  256.00  in North Energy ASA on April 25, 2025 and sell it today you would earn a total of  26.00  from holding North Energy ASA or generate 10.16% return on investment over 90 days.

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

North Energy ASA  vs.  Electromagnetic Geoservices AS

North Energy ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in North Energy ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, North Energy may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Electromagnetic Geoservices

Risk-Adjusted Performance

Very Weak

Over the last 90 days Electromagnetic Geoservices ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Electromagnetic Geoservices 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 North Energy and Electromagnetic Geoservices

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

The idea behind North Energy ASA and Electromagnetic Geoservices ASA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.