Correlation Between Bengal Energy and Dno ASA
Can any of the company-specific risk be diversified away by investing in both Bengal Energy 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 Bengal Energy and Dno ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bengal Energy and Dno ASA, you can compare the effects of market volatilities on Bengal Energy 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 Bengal Energy with a short position of Dno ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bengal Energy and Dno ASA.
Diversification Opportunities for Bengal Energy and Dno ASA
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bengal and Dno is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bengal Energy and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and Bengal Energy 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 Bengal Energy 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 Bengal Energy i.e., Bengal Energy and Dno ASA go up and down completely randomly.
Pair Corralation between Bengal Energy and Dno ASA
Assuming the 90 days horizon Bengal Energy is expected to generate 5.27 times more return on investment than Dno ASA. However, Bengal Energy is 5.27 times more volatile than Dno ASA. It trades about 0.11 of its potential returns per unit of risk. Dno ASA is currently generating about -0.23 per unit of risk. If you would invest 1.00 in Bengal Energy on September 1, 2024 and sell it today you would earn a total of 0.05 from holding Bengal Energy or generate 5.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bengal Energy vs. Dno ASA
Performance |
| Timeline |
| Bengal Energy |
| Dno ASA |
Bengal Energy and Dno ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bengal Energy and Dno ASA
The main advantage of trading using opposite Bengal Energy and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bengal Energy 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.| Bengal Energy vs. Petroleo Brasileiro Petrobras | Bengal Energy vs. Equinor ASA ADR | Bengal Energy vs. Eni SpA ADR | Bengal Energy vs. YPF Sociedad Anonima |
| Dno ASA vs. PetroShale | Dno ASA vs. Horizon Oil Limited | Dno ASA vs. Enwell Energy plc | Dno ASA vs. Tullow Oil plc |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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