Correlation Between DnB ASA and Multiconsult

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

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

Diversification Opportunities for DnB ASA and Multiconsult

0.84

Correlation Coefficient

DnB ASA  Multiconsult

Very poor diversification

The 3 months correlation between DnB and Multiconsult is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding DnB ASA and Multiconsult AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multiconsult AS 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 Multiconsult. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multiconsult AS has no effect on the direction of DnB ASA i.e., DnB ASA and Multiconsult go up and down completely randomly.

Pair Corralation between DnB ASA and Multiconsult

Assuming the 90 days trading horizon DnB ASA is expected to generate 1.16 times less return on investment than Multiconsult. In addition to that, DnB ASA is 1.01 times more volatile than Multiconsult AS. It trades about 0.08 of its total potential returns per unit of risk. Multiconsult AS is currently generating about 0.09 per unit of volatility. If you would invest  18,000  in Multiconsult AS on September 21, 2024 and sell it today you would earn a total of  1,050  from holding Multiconsult AS or generate 5.83% return on investment over 90 days.

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

DnB ASA  vs.  Multiconsult AS

DnB ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DnB ASA are ranked lower than 5 (%) 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.

Multiconsult AS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Multiconsult AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Multiconsult is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with DnB ASA and Multiconsult

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

The idea behind DnB ASA and Multiconsult AS 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.