Correlation Between SalMar ASA and NorAm Drilling

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both SalMar ASA 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 SalMar ASA and NorAm Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SalMar ASA and NorAm Drilling AS, you can compare the effects of market volatilities on SalMar ASA 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 SalMar ASA with a short position of NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of SalMar ASA and NorAm Drilling.

Diversification Opportunities for SalMar ASA and NorAm Drilling

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between SalMar and NorAm is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SalMar 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 SalMar ASA 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 SalMar 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 SalMar ASA i.e., SalMar ASA and NorAm Drilling go up and down completely randomly.

Pair Corralation between SalMar ASA and NorAm Drilling

Assuming the 90 days horizon SalMar ASA is expected to generate 0.38 times more return on investment than NorAm Drilling. However, SalMar ASA is 2.61 times less risky than NorAm Drilling. It trades about 0.0 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about -0.04 per unit of risk. If you would invest  4,592  in SalMar ASA on September 22, 2024 and sell it today you would lose (66.00) from holding SalMar ASA or give up 1.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

SalMar ASA  vs.  NorAm Drilling AS

 Performance 
       Timeline  
SalMar ASA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SalMar ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SalMar ASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
NorAm Drilling AS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NorAm Drilling AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

SalMar ASA and NorAm Drilling Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SalMar ASA and NorAm Drilling

The main advantage of trading using opposite SalMar ASA and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SalMar ASA 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 SalMar 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.
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

Other Complementary Tools

Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets