Correlation Between DNB NOR and Aega ASA

Can any of the company-specific risk be diversified away by investing in both DNB NOR and Aega 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 DNB NOR and Aega ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DNB NOR KAPFORV and Aega ASA, you can compare the effects of market volatilities on DNB NOR and Aega 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 DNB NOR with a short position of Aega ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of DNB NOR and Aega ASA.

Diversification Opportunities for DNB NOR and Aega ASA

-0.19

Correlation Coefficient

DNB NOR  Aega ASA

Good diversification

The 3 months correlation between DNB and Aega is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding DNB NOR KAPFORV and Aega ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aega ASA and DNB NOR 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 NOR KAPFORV are associated (or correlated) with Aega ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aega ASA has no effect on the direction of DNB NOR i.e., DNB NOR and Aega ASA go up and down completely randomly.

Pair Corralation between DNB NOR and Aega ASA

Assuming the 90 days trading horizon DNB NOR KAPFORV is expected to under-perform the Aega ASA. But the fund apears to be less risky and, when comparing its historical volatility, DNB NOR KAPFORV is 244.84 times less risky than Aega ASA. The fund trades about -0.03 of its potential returns per unit of risk. The Aega ASA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  34.00  in Aega ASA on September 17, 2024 and sell it today you would earn a total of  52.00  from holding Aega ASA or generate 152.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

DNB NOR KAPFORV  vs.  Aega ASA

DNB NOR KAPFORV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DNB NOR KAPFORV has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, DNB NOR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Aega ASA

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with DNB NOR and Aega ASA

The main advantage of trading using opposite DNB NOR and Aega ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DNB NOR position performs unexpectedly, Aega 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 Aega ASA will offset losses from the drop in Aega ASA's long position.

The idea behind DNB NOR KAPFORV and Aega 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.