Correlation Between Gentex and Dno ASA
Can any of the company-specific risk be diversified away by investing in both Gentex and Dno 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 Gentex and Dno ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gentex and Dno ASA, you can compare the effects of market volatilities on Gentex and Dno 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 Gentex with a short position of Dno ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gentex and Dno ASA.
Diversification Opportunities for Gentex and Dno ASA
Weak diversification
The 3 months correlation between Gentex and Dno is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Gentex and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and Gentex 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 Gentex are associated (or correlated) with Dno ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dno ASA has no effect on the direction of Gentex i.e., Gentex and Dno ASA go up and down completely randomly.
Pair Corralation between Gentex and Dno ASA
Assuming the 90 days horizon Gentex is expected to generate 1.09 times less return on investment than Dno ASA. But when comparing it to its historical volatility, Gentex is 1.46 times less risky than Dno ASA. It trades about 0.03 of its potential returns per unit of risk. Dno ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,138 in Dno ASA on September 23, 2024 and sell it today you would earn a total of 111.00 from holding Dno ASA or generate 9.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gentex vs. Dno ASA
Performance |
| Timeline |
| Gentex |
| Dno ASA |
Gentex and Dno ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gentex and Dno ASA
The main advantage of trading using opposite Gentex and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gentex position performs unexpectedly, Dno 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 Dno ASA will offset losses from the drop in Dno ASA's long position.The idea behind Gentex and Dno ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dno ASA vs. Silicon Motion Technology | Dno ASA vs. QUEEN S ROAD | Dno ASA vs. TRAINLINE PLC LS | Dno ASA vs. Nissan Chemical Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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