Correlation Between Telenor ASA and Endur ASA

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

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

Diversification Opportunities for Telenor ASA and Endur ASA

-0.68

Correlation Coefficient

Telenor ASA  Endur ASA

Excellent diversification

The 3 months correlation between Telenor and Endur is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Telenor ASA and Endur ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endur ASA and Telenor 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 Telenor ASA are associated (or correlated) with Endur ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endur ASA has no effect on the direction of Telenor ASA i.e., Telenor ASA and Endur ASA go up and down completely randomly.

Pair Corralation between Telenor ASA and Endur ASA

Assuming the 90 days trading horizon Telenor ASA is expected to generate 7.25 times less return on investment than Endur ASA. But when comparing it to its historical volatility, Telenor ASA is 1.45 times less risky than Endur ASA. It trades about 0.03 of its potential returns per unit of risk. Endur ASA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  5,730  in Endur ASA on October 22, 2024 and sell it today you would earn a total of  1,060  from holding Endur ASA or generate 18.5% return on investment over 90 days.

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

Telenor ASA  vs.  Endur ASA

Telenor ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Telenor ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Endur ASA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Endur ASA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Endur ASA displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telenor ASA and Endur ASA

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

The idea behind Telenor ASA and Endur 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.

Check out your portfolio center.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.