Correlation Between Dno ASA and Eidesvik Offshore
Can any of the company-specific risk be diversified away by investing in both Dno ASA and Eidesvik 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 Dno ASA and Eidesvik Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dno ASA and Eidesvik Offshore ASA, you can compare the effects of market volatilities on Dno ASA and Eidesvik 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 Dno ASA with a short position of Eidesvik Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dno ASA and Eidesvik Offshore.
Diversification Opportunities for Dno ASA and Eidesvik Offshore
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dno and Eidesvik is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dno ASA and Eidesvik Offshore ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eidesvik Offshore ASA and Dno 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 Dno ASA are associated (or correlated) with Eidesvik Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eidesvik Offshore ASA has no effect on the direction of Dno ASA i.e., Dno ASA and Eidesvik Offshore go up and down completely randomly.
Pair Corralation between Dno ASA and Eidesvik Offshore
Assuming the 90 days trading horizon Dno ASA is expected to generate 0.86 times more return on investment than Eidesvik Offshore. However, Dno ASA is 1.16 times less risky than Eidesvik Offshore. It trades about 0.03 of its potential returns per unit of risk. Eidesvik Offshore ASA is currently generating about -0.03 per unit of risk. If you would invest 975.00 in Dno ASA on September 3, 2024 and sell it today you would earn a total of 46.00 from holding Dno ASA or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dno ASA vs. Eidesvik Offshore ASA
Performance |
| Timeline |
| Dno ASA |
| Eidesvik Offshore ASA |
Dno ASA and Eidesvik Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dno ASA and Eidesvik Offshore
The main advantage of trading using opposite Dno ASA and Eidesvik Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dno ASA position performs unexpectedly, Eidesvik 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 Eidesvik Offshore will offset losses from the drop in Eidesvik Offshore's long position.| Dno ASA vs. Aker Solutions ASA | Dno ASA vs. Storebrand ASA | Dno ASA vs. Frontline | Dno ASA vs. Subsea 7 SA |
| Eidesvik Offshore vs. BW Energy | Eidesvik Offshore vs. Subsea 7 SA | Eidesvik Offshore vs. BW LPG | Eidesvik Offshore vs. Dno 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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