Correlation Between Dno ASA and North Energy

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

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

Diversification Opportunities for Dno ASA and North Energy

0.86

Correlation Coefficient

Dno ASA  North Energy

Very poor diversification

The 3 months correlation between Dno and North is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dno ASA and North Energy ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Energy ASA 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 North Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Energy ASA has no effect on the direction of Dno ASA i.e., Dno ASA and North Energy go up and down completely randomly.

Pair Corralation between Dno ASA and North Energy

Assuming the 90 days trading horizon Dno ASA is expected to generate 1.29 times more return on investment than North Energy. However, Dno ASA is 1.29 times more volatile than North Energy ASA. It trades about 0.14 of its potential returns per unit of risk. North Energy ASA is currently generating about 0.13 per unit of risk. If you would invest  1,161  in Dno ASA on April 23, 2025 and sell it today you would earn a total of  239.00  from holding Dno ASA or generate 20.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

Dno ASA  vs.  North Energy ASA

Dno ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dno ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Dno ASA disclosed solid returns over the last few months and may actually be approaching a breakup point.

North Energy ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in North Energy ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, North Energy displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dno ASA and North Energy

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

The idea behind Dno ASA and North Energy 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.

Check out your portfolio center.

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 CEOs Directory module to screen CEOs from public companies around the world.