Correlation Between Battalion Oil and Dno ASA

Can any of the company-specific risk be diversified away by investing in both Battalion 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 Battalion 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 Battalion Oil Corp and Dno ASA, you can compare the effects of market volatilities on Battalion 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 Battalion Oil with a short position of Dno ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Battalion Oil and Dno ASA.

Diversification Opportunities for Battalion Oil and Dno ASA

0.73

Correlation Coefficient

Battalion Oil  Dno ASA

Poor diversification

The 3 months correlation between Battalion and Dno is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Battalion Oil Corp and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and Battalion 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 Battalion Oil Corp 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 Battalion Oil i.e., Battalion Oil and Dno ASA go up and down completely randomly.

Pair Corralation between Battalion Oil and Dno ASA

Given the investment horizon of 90 days Battalion Oil Corp is expected to under-perform the Dno ASA. In addition to that, Battalion Oil is 2.12 times more volatile than Dno ASA. It trades about -0.01 of its total potential returns per unit of risk. Dno ASA is currently generating about 0.06 per unit of volatility. If you would invest  62.00  in Dno ASA on October 2, 2024 and sell it today you would earn a total of  26.00  from holding Dno ASA or generate 41.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	80.79%
Values	Daily Returns

Battalion Oil Corp  vs.  Dno ASA

Battalion Oil Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Battalion Oil Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Dno ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dno ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Battalion Oil and Dno ASA

The main advantage of trading using opposite Battalion Oil and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Battalion 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.

The idea behind Battalion Oil Corp 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.

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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.