Correlation Between Dolphin Drilling and Bien Sparebank

Can any of the company-specific risk be diversified away by investing in both Dolphin Drilling and Bien Sparebank 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 Dolphin Drilling and Bien Sparebank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dolphin Drilling AS and Bien Sparebank ASA, you can compare the effects of market volatilities on Dolphin Drilling and Bien Sparebank 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 Dolphin Drilling with a short position of Bien Sparebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dolphin Drilling and Bien Sparebank.

Diversification Opportunities for Dolphin Drilling and Bien Sparebank

-0.42

Correlation Coefficient

Dolphin Drilling  Bien Sparebank

Very good diversification

The 3 months correlation between Dolphin and Bien is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dolphin Drilling AS and Bien Sparebank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bien Sparebank ASA and Dolphin Drilling 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 Dolphin Drilling AS are associated (or correlated) with Bien Sparebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bien Sparebank ASA has no effect on the direction of Dolphin Drilling i.e., Dolphin Drilling and Bien Sparebank go up and down completely randomly.

Pair Corralation between Dolphin Drilling and Bien Sparebank

Assuming the 90 days trading horizon Dolphin Drilling AS is expected to under-perform the Bien Sparebank. In addition to that, Dolphin Drilling is 1.73 times more volatile than Bien Sparebank ASA. It trades about -0.02 of its total potential returns per unit of risk. Bien Sparebank ASA is currently generating about 0.11 per unit of volatility. If you would invest  12,400  in Bien Sparebank ASA on November 29, 2024 and sell it today you would earn a total of  1,900  from holding Bien Sparebank ASA or generate 15.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Dolphin Drilling AS  vs.  Bien Sparebank ASA

Dolphin Drilling

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dolphin Drilling AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Dolphin Drilling is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Bien Sparebank ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bien Sparebank ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Bien Sparebank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dolphin Drilling and Bien Sparebank

The main advantage of trading using opposite Dolphin Drilling and Bien Sparebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dolphin Drilling position performs unexpectedly, Bien Sparebank 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 Bien Sparebank will offset losses from the drop in Bien Sparebank's long position.

The idea behind Dolphin Drilling AS and Bien Sparebank 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.