Correlation Between Nib Holdings and BORR DRILLING

Can any of the company-specific risk be diversified away by investing in both Nib Holdings and BORR 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 Nib Holdings and BORR DRILLING into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between nib holdings limited and BORR DRILLING NEW, you can compare the effects of market volatilities on Nib Holdings and BORR 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 Nib Holdings with a short position of BORR DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nib Holdings and BORR DRILLING.

Diversification Opportunities for Nib Holdings and BORR DRILLING

0.35

Correlation Coefficient

Nib Holdings  BORR DRILLING

Weak diversification

The 3 months correlation between Nib and BORR is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding nib holdings limited and BORR DRILLING NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BORR DRILLING NEW and Nib Holdings 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 nib holdings limited are associated (or correlated) with BORR DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BORR DRILLING NEW has no effect on the direction of Nib Holdings i.e., Nib Holdings and BORR DRILLING go up and down completely randomly.

Pair Corralation between Nib Holdings and BORR DRILLING

Assuming the 90 days horizon nib holdings limited is expected to under-perform the BORR DRILLING. But the stock apears to be less risky and, when comparing its historical volatility, nib holdings limited is 1.67 times less risky than BORR DRILLING. The stock trades about -0.02 of its potential returns per unit of risk. The BORR DRILLING NEW is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  400.00  in BORR DRILLING NEW on September 14, 2024 and sell it today you would lose (35.00) from holding BORR DRILLING NEW or give up 8.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

nib holdings limited  vs.  BORR DRILLING NEW

nib holdings limited

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in nib holdings limited are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nib Holdings is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

BORR DRILLING NEW

Risk-Adjusted Performance

0 of 100

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.

Pair Trading with Nib Holdings and BORR DRILLING

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

The idea behind nib holdings limited and BORR DRILLING NEW 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .