Correlation Between NorAm Drilling and Identiv

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

Diversification Opportunities for NorAm Drilling and Identiv

-0.16

Correlation Coefficient

NorAm Drilling  Identiv

Good diversification

The 3 months correlation between NorAm and Identiv is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding NorAm Drilling AS and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv 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 Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of NorAm Drilling i.e., NorAm Drilling and Identiv go up and down completely randomly.

Pair Corralation between NorAm Drilling and Identiv

Assuming the 90 days horizon NorAm Drilling AS is expected to under-perform the Identiv. In addition to that, NorAm Drilling is 1.85 times more volatile than Identiv. It trades about 0.0 of its total potential returns per unit of risk. Identiv is currently generating about 0.1 per unit of volatility. If you would invest  297.00  in Identiv on August 31, 2024 and sell it today you would earn a total of  52.00  from holding Identiv or generate 17.51% return on investment over 90 days.

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

NorAm Drilling AS  vs.  Identiv

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.

Identiv

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Identiv are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Identiv reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NorAm Drilling and Identiv

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

The idea behind NorAm Drilling AS and Identiv 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.