Correlation Between Tysnes Sparebank and DnB ASA

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

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

Diversification Opportunities for Tysnes Sparebank and DnB ASA

-0.64

Correlation Coefficient

Tysnes Sparebank  DnB ASA

Excellent diversification

The 3 months correlation between Tysnes and DnB is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Tysnes Sparebank and DnB ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DnB ASA and Tysnes Sparebank 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 Tysnes Sparebank are associated (or correlated) with DnB ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DnB ASA has no effect on the direction of Tysnes Sparebank i.e., Tysnes Sparebank and DnB ASA go up and down completely randomly.

Pair Corralation between Tysnes Sparebank and DnB ASA

Assuming the 90 days trading horizon Tysnes Sparebank is expected to under-perform the DnB ASA. But the stock apears to be less risky and, when comparing its historical volatility, Tysnes Sparebank is 1.9 times less risky than DnB ASA. The stock trades about -0.15 of its potential returns per unit of risk. The DnB ASA is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  23,820  in DnB ASA on December 5, 2024 and sell it today you would earn a total of  1,800  from holding DnB ASA or generate 7.56% return on investment over 90 days.

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

Tysnes Sparebank  vs.  DnB ASA

Tysnes Sparebank

Risk-Adjusted Performance

Very Weak

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

DnB ASA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DnB ASA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, DnB ASA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tysnes Sparebank and DnB ASA

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

The idea behind Tysnes Sparebank and DnB 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.