Correlation Between ShaMaran Petroleum and Dno ASA

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

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

Diversification Opportunities for ShaMaran Petroleum and Dno ASA

-0.82

Correlation Coefficient

ShaMaran Petroleum  Dno ASA

Pay attention - limited upside

The 3 months correlation between ShaMaran and Dno is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding ShaMaran Petroleum Corp and Dno ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dno ASA and ShaMaran Petroleum 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 ShaMaran Petroleum Corp 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 ShaMaran Petroleum i.e., ShaMaran Petroleum and Dno ASA go up and down completely randomly.

Pair Corralation between ShaMaran Petroleum and Dno ASA

Assuming the 90 days horizon ShaMaran Petroleum is expected to generate 1.47 times less return on investment than Dno ASA. But when comparing it to its historical volatility, ShaMaran Petroleum Corp is 1.36 times less risky than Dno ASA. It trades about 0.06 of its potential returns per unit of risk. Dno ASA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  122.00  in Dno ASA on September 26, 2024 and sell it today you would lose (34.00) from holding Dno ASA or give up 27.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	72.78%
Values	Daily Returns

ShaMaran Petroleum Corp  vs.  Dno ASA

ShaMaran Petroleum Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ShaMaran Petroleum Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ShaMaran Petroleum reported solid returns over the last few months and may actually be approaching a breakup point.

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ShaMaran Petroleum and Dno ASA

The main advantage of trading using opposite ShaMaran Petroleum and Dno ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShaMaran Petroleum 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 ShaMaran Petroleum Corp 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.