Correlation Between Dno ASA and Telenor ASA

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

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

Diversification Opportunities for Dno ASA and Telenor ASA

-0.45

Correlation Coefficient

Dno ASA  Telenor ASA

Very good diversification

The 3 months correlation between Dno and Telenor is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dno ASA and Telenor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telenor 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 Telenor ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telenor ASA has no effect on the direction of Dno ASA i.e., Dno ASA and Telenor ASA go up and down completely randomly.

Pair Corralation between Dno ASA and Telenor ASA

Assuming the 90 days trading horizon Dno ASA is expected to under-perform the Telenor ASA. In addition to that, Dno ASA is 1.86 times more volatile than Telenor ASA. It trades about -0.04 of its total potential returns per unit of risk. Telenor ASA is currently generating about 0.0 per unit of volatility. If you would invest  12,901  in Telenor ASA on September 3, 2024 and sell it today you would lose (61.00) from holding Telenor ASA or give up 0.47% of portfolio value over 90 days.

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

Dno ASA  vs.  Telenor 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 quite persistent basic indicators, Dno ASA is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Telenor ASA

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Telenor ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, Telenor ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Dno ASA and Telenor ASA

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

The idea behind Dno ASA and Telenor 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.