Correlation Between NorAm Drilling and RESMINING UNSPADR10

Can any of the company-specific risk be diversified away by investing in both NorAm Drilling and RESMINING UNSPADR10 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 RESMINING UNSPADR10 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 RESMINING UNSPADR10, you can compare the effects of market volatilities on NorAm Drilling and RESMINING UNSPADR10 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 RESMINING UNSPADR10. Check out your portfolio center. Please also check ongoing floating volatility patterns of NorAm Drilling and RESMINING UNSPADR10.

Diversification Opportunities for NorAm Drilling and RESMINING UNSPADR10

-0.72

Correlation Coefficient

NorAm Drilling  RESMINING UNSPADR10

Pay attention - limited upside

The 3 months correlation between NorAm and RESMINING is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and RESMINING UNSPADR10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RESMINING UNSPADR10 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 RESMINING UNSPADR10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RESMINING UNSPADR10 has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and RESMINING UNSPADR10 go up and down completely randomly.

Pair Corralation between NorAm Drilling and RESMINING UNSPADR10

Assuming the 90 days trading horizon NorAm Drilling AS is expected to under-perform the RESMINING UNSPADR10. But the stock apears to be less risky and, when comparing its historical volatility, NorAm Drilling AS is 1.88 times less risky than RESMINING UNSPADR10. The stock trades about -0.04 of its potential returns per unit of risk. The RESMINING UNSPADR10 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  252.00  in RESMINING UNSPADR10 on April 20, 2025 and sell it today you would earn a total of  90.00  from holding RESMINING UNSPADR10 or generate 35.71% return on investment over 90 days.

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

NorAm Drilling AS  vs.  RESMINING UNSPADR10

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 comparatively stable basic indicators, NorAm Drilling is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

RESMINING UNSPADR10

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RESMINING UNSPADR10 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, RESMINING UNSPADR10 reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NorAm Drilling and RESMINING UNSPADR10

The main advantage of trading using opposite NorAm Drilling and RESMINING UNSPADR10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NorAm Drilling position performs unexpectedly, RESMINING UNSPADR10 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 RESMINING UNSPADR10 will offset losses from the drop in RESMINING UNSPADR10's long position.

The idea behind NorAm Drilling AS and RESMINING UNSPADR10 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.