Correlation Between SalMar ASA and NorAm Drilling
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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
SalMar ASA vs. NorAm Drilling AS
Performance |
Timeline |
SalMar ASA |
NorAm Drilling AS |
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.SalMar ASA vs. Archer Daniels Midland | SalMar ASA vs. Archer Daniels Midland | SalMar ASA vs. Tyson Foods | SalMar ASA vs. Wilmar International Limited |
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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.
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