Correlation Between Var Energi and Petronor

Can any of the company-specific risk be diversified away by investing in both Var Energi 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 Var Energi and Petronor 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 Petronor EP, you can compare the effects of market volatilities on Var Energi 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 Var Energi with a short position of Petronor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Var Energi and Petronor.

Diversification Opportunities for Var Energi and Petronor

0.7

Correlation Coefficient

Var Energi  Petronor

Poor diversification

The 3 months correlation between Var and Petronor is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Var Energi ASA and Petronor EP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petronor EP 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 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 Var Energi i.e., Var Energi and Petronor go up and down completely randomly.

Pair Corralation between Var Energi and Petronor

Assuming the 90 days trading horizon Var Energi is expected to generate 1.36 times less return on investment than Petronor. But when comparing it to its historical volatility, Var Energi ASA is 1.54 times less risky than Petronor. It trades about 0.19 of its potential returns per unit of risk. Petronor EP is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  863.00  in Petronor EP on April 22, 2025 and sell it today you would earn a total of  245.00  from holding Petronor EP or generate 28.39% return on investment over 90 days.

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

Var Energi ASA  vs.  Petronor EP

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.

Petronor EP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Petronor EP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Petronor disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Var Energi and Petronor

The main advantage of trading using opposite Var Energi and Petronor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Var Energi 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 Var Energi 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.