Correlation Between DnB ASA and Telenor ASA
Can any of the company-specific risk be diversified away by investing in both DnB ASA and Telenor 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 DnB ASA and Telenor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DnB ASA and Telenor ASA, you can compare the effects of market volatilities on DnB ASA and Telenor 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 DnB ASA with a short position of Telenor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of DnB ASA and Telenor ASA.
Diversification Opportunities for DnB ASA and Telenor ASA
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DnB and Telenor is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding DnB ASA and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor ASA 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of DnB ASA i.e., DnB ASA and Telenor ASA go up and down completely randomly.
Pair Corralation between DnB ASA and Telenor ASA
Assuming the 90 days trading horizon DnB ASA is expected to generate 0.87 times more return on investment than Telenor ASA. However, DnB ASA is 1.15 times less risky than Telenor ASA. It trades about 0.11 of its potential returns per unit of risk. Telenor ASA is currently generating about 0.07 per unit of risk. If you would invest 21,920 in DnB ASA on November 2, 2024 and sell it today you would earn a total of 2,490 from holding DnB ASA or generate 11.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DnB ASA vs. Telenor ASA
Performance |
| Timeline |
| DnB ASA |
| Telenor ASA |
DnB ASA and Telenor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DnB ASA and Telenor ASA
The main advantage of trading using opposite DnB ASA and Telenor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DnB ASA position performs unexpectedly, Telenor 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 Telenor ASA will offset losses from the drop in Telenor ASA's long position.| DnB ASA vs. Telenor ASA | DnB ASA vs. Storebrand ASA | DnB ASA vs. Orkla ASA | DnB ASA vs. Gjensidige Forsikring ASA |
| Telenor ASA vs. Orkla ASA | Telenor ASA vs. DnB ASA | Telenor ASA vs. Yara International ASA | Telenor ASA vs. Storebrand 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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