Correlation Between Horizon Oil and Dno ASA
Can any of the company-specific risk be diversified away by investing in both Horizon Oil 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 Horizon Oil and Dno ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Horizon Oil Limited and Dno ASA, you can compare the effects of market volatilities on Horizon Oil 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 Horizon Oil with a short position of Dno ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Oil and Dno ASA.
Diversification Opportunities for Horizon Oil and Dno ASA
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Horizon and Dno is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Oil Limited and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and Horizon Oil 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 Horizon Oil Limited 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 Horizon Oil i.e., Horizon Oil and Dno ASA go up and down completely randomly.
Pair Corralation between Horizon Oil and Dno ASA
Assuming the 90 days horizon Horizon Oil Limited is expected to generate 1.29 times more return on investment than Dno ASA. However, Horizon Oil is 1.29 times more volatile than Dno ASA. It trades about 0.07 of its potential returns per unit of risk. Dno ASA is currently generating about 0.07 per unit of risk. If you would invest 8.51 in Horizon Oil Limited on August 28, 2024 and sell it today you would earn a total of 4.49 from holding Horizon Oil Limited or generate 52.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Horizon Oil Limited vs. Dno ASA
Performance |
| Timeline |
| Horizon Oil Limited |
| Dno ASA |
Horizon Oil and Dno ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Horizon Oil and Dno ASA
The main advantage of trading using opposite Horizon Oil and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Horizon Oil 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.| Horizon Oil vs. Permian Resources | Horizon Oil vs. Devon Energy | Horizon Oil vs. EOG Resources | Horizon Oil vs. Coterra Energy |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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