Correlation Between Dalata Hotel and DNB Norge

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Can any of the company-specific risk be diversified away by investing in both Dalata Hotel and DNB Norge 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 Dalata Hotel and DNB Norge into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dalata Hotel Group and DNB Norge Selektiv, you can compare the effects of market volatilities on Dalata Hotel and DNB Norge 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 Dalata Hotel with a short position of DNB Norge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalata Hotel and DNB Norge.

Diversification Opportunities for Dalata Hotel and DNB Norge

0.18
  Correlation Coefficient

Average diversification

The 3 months correlation between Dalata and DNB is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Dalata Hotel Group and DNB Norge Selektiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DNB Norge Selektiv and Dalata Hotel 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 Dalata Hotel Group are associated (or correlated) with DNB Norge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DNB Norge Selektiv has no effect on the direction of Dalata Hotel i.e., Dalata Hotel and DNB Norge go up and down completely randomly.

Pair Corralation between Dalata Hotel and DNB Norge

Assuming the 90 days trading horizon Dalata Hotel Group is expected to generate 1.97 times more return on investment than DNB Norge. However, Dalata Hotel is 1.97 times more volatile than DNB Norge Selektiv. It trades about 0.12 of its potential returns per unit of risk. DNB Norge Selektiv is currently generating about 0.03 per unit of risk. If you would invest  405.00  in Dalata Hotel Group on September 16, 2024 and sell it today you would earn a total of  42.00  from holding Dalata Hotel Group or generate 10.37% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy96.97%
ValuesDaily Returns

Dalata Hotel Group  vs.  DNB Norge Selektiv

 Performance 
       Timeline  
Dalata Hotel Group 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Dalata Hotel Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Dalata Hotel may actually be approaching a critical reversion point that can send shares even higher in January 2025.
DNB Norge Selektiv 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in DNB Norge Selektiv are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound technical and fundamental indicators, DNB Norge is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Dalata Hotel and DNB Norge Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dalata Hotel and DNB Norge

The main advantage of trading using opposite Dalata Hotel and DNB Norge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalata Hotel position performs unexpectedly, DNB Norge 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 DNB Norge will offset losses from the drop in DNB Norge's long position.
The idea behind Dalata Hotel Group and DNB Norge Selektiv 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.

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