Correlation Between North Energy and Norwegian Block

Can any of the company-specific risk be diversified away by investing in both North Energy and Norwegian Block 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 Norwegian Block 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 Norwegian Block Exchange, you can compare the effects of market volatilities on North Energy and Norwegian Block 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 Norwegian Block. Check out your portfolio center. Please also check ongoing floating volatility patterns of North Energy and Norwegian Block.

Diversification Opportunities for North Energy and Norwegian Block

0.76

Correlation Coefficient

North Energy  Norwegian Block

Poor diversification

The 3 months correlation between North and Norwegian is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding North Energy ASA and Norwegian Block Exchange in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Block Exchange 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 Norwegian Block. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Block Exchange has no effect on the direction of North Energy i.e., North Energy and Norwegian Block go up and down completely randomly.

Pair Corralation between North Energy and Norwegian Block

Assuming the 90 days trading horizon North Energy is expected to generate 14.33 times less return on investment than Norwegian Block. But when comparing it to its historical volatility, North Energy ASA is 9.89 times less risky than Norwegian Block. It trades about 0.1 of its potential returns per unit of risk. Norwegian Block Exchange is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  21.00  in Norwegian Block Exchange on April 24, 2025 and sell it today you would earn a total of  32.00  from holding Norwegian Block Exchange or generate 152.38% return on investment over 90 days.

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

North Energy ASA  vs.  Norwegian Block Exchange

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.

Norwegian Block Exchange

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Norwegian Block Exchange are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Norwegian Block disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with North Energy and Norwegian Block

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

The idea behind North Energy ASA and Norwegian Block Exchange 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.