Correlation Between Enwell Energy and Dno ASA

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

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

Diversification Opportunities for Enwell Energy and Dno ASA

0.0

Correlation Coefficient

Enwell Energy  Dno ASA

Pay attention - limited upside

The 3 months correlation between Enwell and Dno is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Enwell Energy plc and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and Enwell Energy 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 Enwell Energy plc are associated (or correlated) with Dno ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dno ASA has no effect on the direction of Enwell Energy i.e., Enwell Energy and Dno ASA go up and down completely randomly.

Pair Corralation between Enwell Energy and Dno ASA

Assuming the 90 days horizon Enwell Energy plc is expected to generate 1.66 times more return on investment than Dno ASA. However, Enwell Energy is 1.66 times more volatile than Dno ASA. It trades about 0.03 of its potential returns per unit of risk. Dno ASA is currently generating about 0.03 per unit of risk. If you would invest  36.00  in Enwell Energy plc on September 1, 2024 and sell it today you would lose (12.00) from holding Enwell Energy plc or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	63.71%
Values	Daily Returns

Enwell Energy plc  vs.  Dno ASA

Enwell Energy plc

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Enwell Energy plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, Enwell Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Dno ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dno ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Enwell Energy and Dno ASA

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

The idea behind Enwell Energy plc and Dno 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 Stocks Directory module to find actively traded stocks across global markets.