Correlation Between DnB ASA and Goodtech
Can any of the company-specific risk be diversified away by investing in both DnB ASA and Goodtech 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 DnB ASA and Goodtech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DnB ASA and Goodtech, you can compare the effects of market volatilities on DnB ASA and Goodtech 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 DnB ASA with a short position of Goodtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of DnB ASA and Goodtech.
Diversification Opportunities for DnB ASA and Goodtech
Pay attention - limited upside
The 3 months correlation between DnB and Goodtech is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding DnB ASA and Goodtech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodtech and DnB 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 DnB ASA are associated (or correlated) with Goodtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodtech has no effect on the direction of DnB ASA i.e., DnB ASA and Goodtech go up and down completely randomly.
Pair Corralation between DnB ASA and Goodtech
Assuming the 90 days trading horizon DnB ASA is expected to generate 0.47 times more return on investment than Goodtech. However, DnB ASA is 2.11 times less risky than Goodtech. It trades about 0.04 of its potential returns per unit of risk. Goodtech is currently generating about -0.3 per unit of risk. If you would invest 22,880 in DnB ASA on August 28, 2024 and sell it today you would earn a total of 160.00 from holding DnB ASA or generate 0.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DnB ASA vs. Goodtech
Performance |
| Timeline |
| DnB ASA |
| Goodtech |
DnB ASA and Goodtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DnB ASA and Goodtech
The main advantage of trading using opposite DnB ASA and Goodtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DnB ASA position performs unexpectedly, Goodtech 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 Goodtech will offset losses from the drop in Goodtech's long position.| DnB ASA vs. Telenor ASA | DnB ASA vs. Storebrand ASA | DnB ASA vs. Orkla ASA | DnB ASA vs. Gjensidige Forsikring ASA |
| Goodtech vs. Eidesvik Offshore ASA | Goodtech vs. Kitron ASA | Goodtech vs. Havila Shipping ASA | Goodtech vs. Elkem ASA |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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