Correlation Between Orkla ASA and Petronor

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

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

Diversification Opportunities for Orkla ASA and Petronor

-0.6

Correlation Coefficient

Orkla ASA  Petronor

Excellent diversification

The 3 months correlation between Orkla and Petronor is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Orkla ASA and Petronor EP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronor EP and Orkla 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 Orkla ASA are associated (or correlated) with Petronor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petronor EP has no effect on the direction of Orkla ASA i.e., Orkla ASA and Petronor go up and down completely randomly.

Pair Corralation between Orkla ASA and Petronor

Assuming the 90 days trading horizon Orkla ASA is expected to under-perform the Petronor. But the stock apears to be less risky and, when comparing its historical volatility, Orkla ASA is 1.76 times less risky than Petronor. The stock trades about -0.08 of its potential returns per unit of risk. The Petronor EP is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  871.00  in Petronor EP on April 24, 2025 and sell it today you would earn a total of  225.00  from holding Petronor EP or generate 25.83% return on investment over 90 days.

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

Orkla ASA  vs.  Petronor EP

Orkla ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Orkla ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Petronor EP

Risk-Adjusted Performance

Good

Over the last 90 days Petronor EP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite weak essential indicators, Petronor disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Orkla ASA and Petronor

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

The idea behind Orkla ASA and Petronor EP 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.