Correlation Between NorAm Drilling and Fuji Media

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

Diversification Opportunities for NorAm Drilling and Fuji Media

0.04

Correlation Coefficient

NorAm Drilling  Fuji Media

Significant diversification

The 3 months correlation between NorAm and Fuji is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Fuji Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Media Holdings 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 Fuji Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Media Holdings has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Fuji Media go up and down completely randomly.

Pair Corralation between NorAm Drilling and Fuji Media

Assuming the 90 days horizon NorAm Drilling AS is expected to under-perform the Fuji Media. In addition to that, NorAm Drilling is 3.29 times more volatile than Fuji Media Holdings. It trades about 0.0 of its total potential returns per unit of risk. Fuji Media Holdings is currently generating about 0.05 per unit of volatility. If you would invest  1,030  in Fuji Media Holdings on September 1, 2024 and sell it today you would earn a total of  40.00  from holding Fuji Media Holdings or generate 3.88% return on investment over 90 days.

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

NorAm Drilling AS  vs.  Fuji Media Holdings

NorAm Drilling AS

Risk-Adjusted Performance

0 of 100

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 nearly stable basic indicators, NorAm Drilling is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Fuji Media Holdings

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fuji Media Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Fuji Media is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NorAm Drilling and Fuji Media

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

The idea behind NorAm Drilling AS and Fuji Media Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.