Correlation Between DNB NOR and Integrated Wind

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

Diversification Opportunities for DNB NOR and Integrated Wind

-0.37

Correlation Coefficient

DNB NOR  Integrated Wind

Very good diversification

The 3 months correlation between DNB and Integrated is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding DNB NOR KAPFORV and Integrated Wind Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Wind Solutions 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 Integrated Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Wind Solutions has no effect on the direction of DNB NOR i.e., DNB NOR and Integrated Wind go up and down completely randomly.

Pair Corralation between DNB NOR and Integrated Wind

Assuming the 90 days trading horizon DNB NOR KAPFORV is expected to generate 0.09 times more return on investment than Integrated Wind. However, DNB NOR KAPFORV is 11.19 times less risky than Integrated Wind. It trades about -0.01 of its potential returns per unit of risk. Integrated Wind Solutions is currently generating about -0.08 per unit of risk. If you would invest  109,438  in DNB NOR KAPFORV on September 18, 2024 and sell it today you would lose (75.00) from holding DNB NOR KAPFORV or give up 0.07% of portfolio value over 90 days.

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

DNB NOR KAPFORV  vs.  Integrated Wind Solutions

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.

Integrated Wind Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Integrated Wind Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with DNB NOR and Integrated Wind

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

The idea behind DNB NOR KAPFORV and Integrated Wind Solutions 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.