Correlation Between DnB ASA and Akva

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

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

Diversification Opportunities for DnB ASA and Akva

0.73

Correlation Coefficient

DnB ASA  Akva

Poor diversification

The 3 months correlation between DnB and Akva is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding DnB ASA and Akva Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akva Group and DnB 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 DnB ASA are associated (or correlated) with Akva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akva Group has no effect on the direction of DnB ASA i.e., DnB ASA and Akva go up and down completely randomly.

Pair Corralation between DnB ASA and Akva

Assuming the 90 days trading horizon DnB ASA is expected to generate 0.87 times more return on investment than Akva. However, DnB ASA is 1.14 times less risky than Akva. It trades about -0.11 of its potential returns per unit of risk. Akva Group is currently generating about -0.19 per unit of risk. If you would invest  23,040  in DnB ASA on September 26, 2024 and sell it today you would lose (480.00) from holding DnB ASA or give up 2.08% of portfolio value over 90 days.

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

DnB ASA  vs.  Akva Group

DnB ASA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DnB ASA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, DnB ASA is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Akva Group

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Akva Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, Akva disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DnB ASA and Akva

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

The idea behind DnB ASA and Akva Group 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.