Correlation Between Dno ASA and Panoro Energy

Can any of the company-specific risk be diversified away by investing in both Dno ASA and Panoro Energy 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 Dno ASA and Panoro Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Dno ASA and Panoro Energy

0.56

Correlation Coefficient

Dno ASA  Panoro Energy

Very weak diversification

The 3 months correlation between Dno and Panoro is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dno ASA and Panoro Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panoro Energy ASA and Dno ASA 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 Dno ASA are associated (or correlated) with Panoro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panoro Energy ASA has no effect on the direction of Dno ASA i.e., Dno ASA and Panoro Energy go up and down completely randomly.

Pair Corralation between Dno ASA and Panoro Energy

Assuming the 90 days trading horizon Dno ASA is expected to under-perform the Panoro Energy. In addition to that, Dno ASA is 1.16 times more volatile than Panoro Energy ASA. It trades about -0.07 of its total potential returns per unit of risk. Panoro Energy ASA is currently generating about -0.07 per unit of volatility. If you would invest  2,820  in Panoro Energy ASA on August 31, 2024 and sell it today you would lose (245.00) from holding Panoro Energy ASA or give up 8.69% of portfolio value over 90 days.

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

Dno ASA  vs.  Panoro Energy ASA

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 latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Panoro Energy ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Panoro Energy ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Dno ASA and Panoro Energy

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

The idea behind Dno ASA and Panoro Energy 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .