Correlation Between Aker ASA and Dno ASA
Can any of the company-specific risk be diversified away by investing in both Aker ASA and Dno ASA 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 Aker ASA and Dno ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker ASA and Dno ASA, you can compare the effects of market volatilities on Aker ASA and Dno ASA 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 Aker ASA with a short position of Dno ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker ASA and Dno ASA.
Diversification Opportunities for Aker ASA and Dno ASA
Average diversification
The 3 months correlation between Aker and Dno is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aker ASA and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and Aker 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 Aker ASA are associated (or correlated) with Dno ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dno ASA has no effect on the direction of Aker ASA i.e., Aker ASA and Dno ASA go up and down completely randomly.
Pair Corralation between Aker ASA and Dno ASA
Assuming the 90 days trading horizon Aker ASA is expected to generate 2.96 times less return on investment than Dno ASA. But when comparing it to its historical volatility, Aker ASA is 1.34 times less risky than Dno ASA. It trades about 0.33 of its potential returns per unit of risk. Dno ASA is currently generating about 0.73 of returns per unit of risk over similar time horizon. If you would invest 1,010 in Dno ASA on October 20, 2024 and sell it today you would earn a total of 251.00 from holding Dno ASA or generate 24.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker ASA vs. Dno ASA
Performance |
| Timeline |
| Aker ASA |
| Dno ASA |
Aker ASA and Dno ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker ASA and Dno ASA
The main advantage of trading using opposite Aker ASA and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker ASA position performs unexpectedly, Dno ASA 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 Dno ASA will offset losses from the drop in Dno ASA's long position.| Aker ASA vs. Storebrand ASA | Aker ASA vs. Aker Solutions ASA | Aker ASA vs. DnB ASA | Aker ASA vs. Orkla ASA |
| Dno ASA vs. Aker Solutions ASA | Dno ASA vs. Storebrand ASA | Dno ASA vs. Frontline | Dno ASA vs. Subsea 7 SA |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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