Correlation Between TGS NOPEC and Dno ASA

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

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

Diversification Opportunities for TGS NOPEC and Dno ASA

0.0

Correlation Coefficient

TGS NOPEC  Dno ASA

Pay attention - limited upside

The 3 months correlation between TGS and Dno is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TGS NOPEC Geophysical and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and TGS NOPEC 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 TGS NOPEC Geophysical 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 TGS NOPEC i.e., TGS NOPEC and Dno ASA go up and down completely randomly.

Pair Corralation between TGS NOPEC and Dno ASA

Assuming the 90 days trading horizon TGS NOPEC Geophysical is expected to generate 1.15 times more return on investment than Dno ASA. However, TGS NOPEC is 1.15 times more volatile than Dno ASA. It trades about -0.03 of its potential returns per unit of risk. Dno ASA is currently generating about -0.07 per unit of risk. If you would invest  11,624  in TGS NOPEC Geophysical on August 31, 2024 and sell it today you would lose (714.00) from holding TGS NOPEC Geophysical or give up 6.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

TGS NOPEC Geophysical  vs.  Dno ASA

TGS NOPEC Geophysical

Risk-Adjusted Performance

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Very Weak

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

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.

Pair Trading with TGS NOPEC and Dno ASA

The main advantage of trading using opposite TGS NOPEC and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TGS NOPEC 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 TGS NOPEC Geophysical 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.