Correlation Between Dno ASA and PetroShale
Can any of the company-specific risk be diversified away by investing in both Dno ASA and PetroShale 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 PetroShale into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dno ASA and PetroShale, you can compare the effects of market volatilities on Dno ASA and PetroShale 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 PetroShale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dno ASA and PetroShale.
Diversification Opportunities for Dno ASA and PetroShale
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dno and PetroShale is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dno ASA and PetroShale in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroShale 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 PetroShale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroShale has no effect on the direction of Dno ASA i.e., Dno ASA and PetroShale go up and down completely randomly.
Pair Corralation between Dno ASA and PetroShale
Assuming the 90 days horizon Dno ASA is expected to generate 4.86 times more return on investment than PetroShale. However, Dno ASA is 4.86 times more volatile than PetroShale. It trades about 0.06 of its potential returns per unit of risk. PetroShale is currently generating about -0.01 per unit of risk. If you would invest 119.00 in Dno ASA on August 24, 2024 and sell it today you would lose (29.00) from holding Dno ASA or give up 24.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.78% |
| Values | Daily Returns |
Dno ASA vs. PetroShale
Performance |
| Timeline |
| Dno ASA |
| PetroShale |
Dno ASA and PetroShale Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dno ASA and PetroShale
The main advantage of trading using opposite Dno ASA and PetroShale positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dno ASA position performs unexpectedly, PetroShale 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 PetroShale will offset losses from the drop in PetroShale's long position.| Dno ASA vs. Permian Resources | Dno ASA vs. Devon Energy | Dno ASA vs. EOG Resources | Dno ASA vs. Coterra Energy |
| PetroShale vs. Dno ASA | PetroShale vs. Horizon Oil Limited | PetroShale vs. Enwell Energy plc | PetroShale 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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