Correlation Between Dno ASA and Continental Aktiengesellscha

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

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

Diversification Opportunities for Dno ASA and Continental Aktiengesellscha

0.37

Correlation Coefficient

Dno ASA  Continental Aktiengesellscha

Weak diversification

The 3 months correlation between Dno and Continental is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Dno ASA and Continental Aktiengesellschaft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Continental Aktiengesellscha and Dno ASA 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 Dno ASA are associated (or correlated) with Continental Aktiengesellscha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Continental Aktiengesellscha has no effect on the direction of Dno ASA i.e., Dno ASA and Continental Aktiengesellscha go up and down completely randomly.

Pair Corralation between Dno ASA and Continental Aktiengesellscha

Assuming the 90 days horizon Dno ASA is expected to generate 3.17 times less return on investment than Continental Aktiengesellscha. But when comparing it to its historical volatility, Dno ASA is 1.01 times less risky than Continental Aktiengesellscha. It trades about 0.06 of its potential returns per unit of risk. Continental Aktiengesellschaft is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  6,366  in Continental Aktiengesellschaft on April 20, 2025 and sell it today you would earn a total of  1,156  from holding Continental Aktiengesellschaft or generate 18.16% return on investment over 90 days.

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

Dno ASA  vs.  Continental Aktiengesellschaft

Dno ASA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dno ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dno ASA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Continental Aktiengesellscha

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Continental Aktiengesellschaft are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Continental Aktiengesellscha unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dno ASA and Continental Aktiengesellscha

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

The idea behind Dno ASA and Continental Aktiengesellschaft 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.