Correlation Between San Juan and Dno ASA

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

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

Diversification Opportunities for San Juan and Dno ASA

0.64

Correlation Coefficient

San Juan  Dno ASA

Poor diversification

The 3 months correlation between San and Dno is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding San Juan Basin and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and San Juan 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 San Juan Basin 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 San Juan i.e., San Juan and Dno ASA go up and down completely randomly.

Pair Corralation between San Juan and Dno ASA

Considering the 90-day investment horizon San Juan is expected to generate 1.13 times less return on investment than Dno ASA. In addition to that, San Juan is 1.39 times more volatile than Dno ASA. It trades about 0.13 of its total potential returns per unit of risk. Dno ASA is currently generating about 0.21 per unit of volatility. If you would invest  88.00  in Dno ASA on December 23, 2024 and sell it today you would earn a total of  34.00  from holding Dno ASA or generate 38.64% return on investment over 90 days.

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

San Juan Basin  vs.  Dno ASA

San Juan Basin

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in San Juan Basin are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking indicators, San Juan unveiled solid returns over the last few months and may actually be approaching a breakup point.

Dno ASA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dno ASA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Dno ASA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with San Juan and Dno ASA

The main advantage of trading using opposite San Juan and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if San Juan 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 San Juan Basin 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.