Correlation Between Prosafe SE and Equinor ASA
Can any of the company-specific risk be diversified away by investing in both Prosafe SE and Equinor 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 Prosafe SE and Equinor ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prosafe SE and Equinor ASA, you can compare the effects of market volatilities on Prosafe SE and Equinor 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 Prosafe SE with a short position of Equinor ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prosafe SE and Equinor ASA.
Diversification Opportunities for Prosafe SE and Equinor ASA
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Prosafe and Equinor is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Prosafe SE and Equinor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equinor ASA and Prosafe SE 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 Prosafe SE are associated (or correlated) with Equinor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equinor ASA has no effect on the direction of Prosafe SE i.e., Prosafe SE and Equinor ASA go up and down completely randomly.
Pair Corralation between Prosafe SE and Equinor ASA
Assuming the 90 days trading horizon Prosafe SE is expected to under-perform the Equinor ASA. In addition to that, Prosafe SE is 5.73 times more volatile than Equinor ASA. It trades about -0.32 of its total potential returns per unit of risk. Equinor ASA is currently generating about 0.16 per unit of volatility. If you would invest 24,427 in Equinor ASA on September 14, 2024 and sell it today you would earn a total of 1,563 from holding Equinor ASA or generate 6.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prosafe SE vs. Equinor ASA
Performance |
| Timeline |
| Prosafe SE |
| Equinor ASA |
Prosafe SE and Equinor ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prosafe SE and Equinor ASA
The main advantage of trading using opposite Prosafe SE and Equinor ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prosafe SE position performs unexpectedly, Equinor 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 Equinor ASA will offset losses from the drop in Equinor ASA's long position.| Prosafe SE vs. Aker ASA | Prosafe SE vs. Aker Solutions ASA | Prosafe SE vs. BW Offshore | Prosafe SE vs. Solstad Offsho |
| Equinor ASA vs. DnB ASA | Equinor ASA vs. Mowi ASA | Equinor ASA vs. Yara International ASA | Equinor ASA vs. Telenor 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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