Correlation Between Dno ASA and FAR
Can any of the company-specific risk be diversified away by investing in both Dno ASA and FAR 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 FAR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dno ASA and FAR Limited, you can compare the effects of market volatilities on Dno ASA and FAR 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 FAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dno ASA and FAR.
Diversification Opportunities for Dno ASA and FAR
Average diversification
The 3 months correlation between Dno and FAR is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dno ASA and FAR Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FAR Limited 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 FAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FAR Limited has no effect on the direction of Dno ASA i.e., Dno ASA and FAR go up and down completely randomly.
Pair Corralation between Dno ASA and FAR
Assuming the 90 days horizon Dno ASA is expected to under-perform the FAR. In addition to that, Dno ASA is 3.77 times more volatile than FAR Limited. It trades about -0.23 of its total potential returns per unit of risk. FAR Limited is currently generating about -0.21 per unit of volatility. If you would invest 31.00 in FAR Limited on September 1, 2024 and sell it today you would lose (2.00) from holding FAR Limited or give up 6.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dno ASA vs. FAR Limited
Performance |
| Timeline |
| Dno ASA |
| FAR Limited |
Dno ASA and FAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dno ASA and FAR
The main advantage of trading using opposite Dno ASA and FAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dno ASA position performs unexpectedly, FAR 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 FAR will offset losses from the drop in FAR's long position.| 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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