Correlation Between Var Energi and DnB ASA

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

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

Diversification Opportunities for Var Energi and DnB ASA

0.55

Correlation Coefficient

Var Energi  DnB ASA

Very weak diversification

The 3 months correlation between Var and DnB is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and DnB ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DnB ASA and Var Energi 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 Var Energi ASA are associated (or correlated) with DnB ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DnB ASA has no effect on the direction of Var Energi i.e., Var Energi and DnB ASA go up and down completely randomly.

Pair Corralation between Var Energi and DnB ASA

Assuming the 90 days trading horizon Var Energi ASA is expected to generate 1.0 times more return on investment than DnB ASA. However, Var Energi is 1.0 times more volatile than DnB ASA. It trades about 0.19 of its potential returns per unit of risk. DnB ASA is currently generating about 0.06 per unit of risk. If you would invest  2,783  in Var Energi ASA on April 22, 2025 and sell it today you would earn a total of  578.00  from holding Var Energi ASA or generate 20.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Var Energi ASA  vs.  DnB ASA

Var Energi ASA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Var Energi ASA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Var Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

DnB ASA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DnB ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, DnB ASA may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Var Energi and DnB ASA

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

The idea behind Var Energi ASA and DnB 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.