Correlation Between Petrus Resources and Dno ASA

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

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

Diversification Opportunities for Petrus Resources and Dno ASA

0.22

Correlation Coefficient

Petrus Resources  Dno ASA

Modest diversification

The 3 months correlation between Petrus and Dno is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Petrus Resources and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and Petrus Resources 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 Petrus Resources 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 Petrus Resources i.e., Petrus Resources and Dno ASA go up and down completely randomly.

Pair Corralation between Petrus Resources and Dno ASA

Assuming the 90 days horizon Petrus Resources is expected to generate 7.16 times less return on investment than Dno ASA. But when comparing it to its historical volatility, Petrus Resources is 2.0 times less risky than Dno ASA. It trades about 0.09 of its potential returns per unit of risk. Dno ASA is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  88.00  in Dno ASA on October 22, 2024 and sell it today you would earn a total of  23.00  from holding Dno ASA or generate 26.14% return on investment over 90 days.

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

Petrus Resources  vs.  Dno ASA

Petrus Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrus Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Petrus Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 nearly stable basic indicators, Dno ASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Petrus Resources and Dno ASA

The main advantage of trading using opposite Petrus Resources and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrus Resources 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 Petrus Resources 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.