Correlation Between DNB NOR and ARCTIC HIGH

Can any of the company-specific risk be diversified away by investing in both DNB NOR and ARCTIC HIGH 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 ARCTIC HIGH 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 ARCTIC HIGH RETURN, you can compare the effects of market volatilities on DNB NOR and ARCTIC HIGH 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 ARCTIC HIGH. Check out your portfolio center. Please also check ongoing floating volatility patterns of DNB NOR and ARCTIC HIGH.

Diversification Opportunities for DNB NOR and ARCTIC HIGH

0.11

Correlation Coefficient

DNB NOR  ARCTIC HIGH

Average diversification

The 3 months correlation between DNB and ARCTIC is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding DNB NOR KAPFORV and ARCTIC HIGH RETURN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARCTIC HIGH RETURN 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 ARCTIC HIGH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARCTIC HIGH RETURN has no effect on the direction of DNB NOR i.e., DNB NOR and ARCTIC HIGH go up and down completely randomly.

Pair Corralation between DNB NOR and ARCTIC HIGH

Assuming the 90 days trading horizon DNB NOR KAPFORV is expected to under-perform the ARCTIC HIGH. In addition to that, DNB NOR is 1.25 times more volatile than ARCTIC HIGH RETURN. It trades about -0.03 of its total potential returns per unit of risk. ARCTIC HIGH RETURN is currently generating about 0.24 per unit of volatility. If you would invest  199,760  in ARCTIC HIGH RETURN on September 17, 2024 and sell it today you would earn a total of  3,829  from holding ARCTIC HIGH RETURN or generate 1.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

DNB NOR KAPFORV  vs.  ARCTIC HIGH RETURN

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 current stock price disturbance, may contribute to short-term losses for the investors.

ARCTIC HIGH RETURN

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ARCTIC HIGH RETURN are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly stable basic indicators, ARCTIC HIGH is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with DNB NOR and ARCTIC HIGH

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

The idea behind DNB NOR KAPFORV and ARCTIC HIGH RETURN 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.