Correlation Between DnB ASA and Sea1 Offshore
Can any of the company-specific risk be diversified away by investing in both DnB ASA and Sea1 Offshore 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 Sea1 Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DnB ASA and Sea1 Offshore, you can compare the effects of market volatilities on DnB ASA and Sea1 Offshore 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 Sea1 Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of DnB ASA and Sea1 Offshore.
Diversification Opportunities for DnB ASA and Sea1 Offshore
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DnB and Sea1 is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding DnB ASA and Sea1 Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sea1 Offshore 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 Sea1 Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sea1 Offshore has no effect on the direction of DnB ASA i.e., DnB ASA and Sea1 Offshore go up and down completely randomly.
Pair Corralation between DnB ASA and Sea1 Offshore
Assuming the 90 days trading horizon DnB ASA is expected to generate 2.03 times less return on investment than Sea1 Offshore. But when comparing it to its historical volatility, DnB ASA is 2.54 times less risky than Sea1 Offshore. It trades about 0.09 of its potential returns per unit of risk. Sea1 Offshore is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,118 in Sea1 Offshore on August 29, 2024 and sell it today you would earn a total of 812.00 from holding Sea1 Offshore or generate 38.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DnB ASA vs. Sea1 Offshore
Performance |
| Timeline |
| DnB ASA |
| Sea1 Offshore |
DnB ASA and Sea1 Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DnB ASA and Sea1 Offshore
The main advantage of trading using opposite DnB ASA and Sea1 Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DnB ASA position performs unexpectedly, Sea1 Offshore 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 Sea1 Offshore will offset losses from the drop in Sea1 Offshore's long position.| DnB ASA vs. Telenor ASA | DnB ASA vs. Storebrand ASA | DnB ASA vs. Orkla ASA | DnB ASA vs. Gjensidige Forsikring ASA |
| Sea1 Offshore vs. Equinor ASA | Sea1 Offshore vs. DnB ASA | Sea1 Offshore vs. Aker BP ASA | Sea1 Offshore vs. Telenor 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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