Correlation Between BORR DRILLING and NorAm Drilling

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

Diversification Opportunities for BORR DRILLING and NorAm Drilling

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between BORR and NorAm is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding BORR DRILLING NEW 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 BORR 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 BORR DRILLING NEW 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 BORR DRILLING i.e., BORR DRILLING and NorAm Drilling go up and down completely randomly.

Pair Corralation between BORR DRILLING and NorAm Drilling

Assuming the 90 days horizon BORR DRILLING NEW is expected to under-perform the NorAm Drilling. In addition to that, BORR DRILLING is 1.49 times more volatile than NorAm Drilling AS. It trades about -0.13 of its total potential returns per unit of risk. NorAm Drilling AS is currently generating about 0.06 per unit of volatility. If you would invest  266.00  in NorAm Drilling AS on September 19, 2024 and sell it today you would earn a total of  19.00  from holding NorAm Drilling AS or generate 7.14% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

BORR DRILLING NEW  vs.  NorAm Drilling AS

 Performance 
       Timeline  
BORR DRILLING NEW 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BORR DRILLING NEW has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.
NorAm Drilling AS 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in NorAm Drilling AS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NorAm Drilling may actually be approaching a critical reversion point that can send shares even higher in January 2025.

BORR DRILLING and NorAm Drilling Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with BORR DRILLING and NorAm Drilling

The main advantage of trading using opposite BORR DRILLING and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BORR DRILLING 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 BORR DRILLING NEW 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.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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