Correlation Between DNB NOR and Ice Fish

Can any of the company-specific risk be diversified away by investing in both DNB NOR and Ice Fish 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 DNB NOR and Ice Fish into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DNB NOR KAPFORV and Ice Fish Farm, you can compare the effects of market volatilities on DNB NOR and Ice Fish 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 DNB NOR with a short position of Ice Fish. Check out your portfolio center. Please also check ongoing floating volatility patterns of DNB NOR and Ice Fish.

Diversification Opportunities for DNB NOR and Ice Fish

-0.42

Correlation Coefficient

DNB NOR  Ice Fish

Very good diversification

The 3 months correlation between DNB and Ice is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding DNB NOR KAPFORV and Ice Fish Farm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ice Fish Farm and DNB NOR 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 DNB NOR KAPFORV are associated (or correlated) with Ice Fish. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ice Fish Farm has no effect on the direction of DNB NOR i.e., DNB NOR and Ice Fish go up and down completely randomly.

Pair Corralation between DNB NOR and Ice Fish

Assuming the 90 days trading horizon DNB NOR is expected to generate 8.2 times less return on investment than Ice Fish. But when comparing it to its historical volatility, DNB NOR KAPFORV is 36.35 times less risky than Ice Fish. It trades about 0.47 of its potential returns per unit of risk. Ice Fish Farm is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,700  in Ice Fish Farm on September 1, 2024 and sell it today you would earn a total of  240.00  from holding Ice Fish Farm or generate 8.89% return on investment over 90 days.

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

DNB NOR KAPFORV  vs.  Ice Fish Farm

DNB NOR KAPFORV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in DNB NOR KAPFORV are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong basic indicators, DNB NOR is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ice Fish Farm

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ice Fish Farm are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Ice Fish displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DNB NOR and Ice Fish

The main advantage of trading using opposite DNB NOR and Ice Fish positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DNB NOR position performs unexpectedly, Ice Fish 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 Ice Fish will offset losses from the drop in Ice Fish's long position.

The idea behind DNB NOR KAPFORV and Ice Fish Farm 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.