Correlation Between Yara International and Danakali

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

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

Diversification Opportunities for Yara International and Danakali

-0.24

Correlation Coefficient

Yara International  Danakali

Very good diversification

The 3 months correlation between Yara and Danakali is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Yara International ASA and Danakali Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danakali Limited and Yara International 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 Yara International ASA are associated (or correlated) with Danakali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danakali Limited has no effect on the direction of Yara International i.e., Yara International and Danakali go up and down completely randomly.

Pair Corralation between Yara International and Danakali

If you would invest  24.00  in Danakali Limited on February 27, 2024 and sell it today you would earn a total of  0.00  from holding Danakali Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	2.38%
Values	Daily Returns

Yara International ASA  vs.  Danakali Limited

Yara International ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yara International ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Danakali Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danakali Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Danakali is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Yara International and Danakali

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

The idea behind Yara International ASA and Danakali Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.