Correlation Between ADRIATIC METALS and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both ADRIATIC METALS and Norsk Hydro 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 ADRIATIC METALS and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ADRIATIC METALS LS 013355 and Norsk Hydro ASA, you can compare the effects of market volatilities on ADRIATIC METALS and Norsk Hydro 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 ADRIATIC METALS with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADRIATIC METALS and Norsk Hydro.
Diversification Opportunities for ADRIATIC METALS and Norsk Hydro
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ADRIATIC and Norsk is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding ADRIATIC METALS LS 013355 and Norsk Hydro ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsk Hydro ASA and ADRIATIC METALS 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 ADRIATIC METALS LS 013355 are associated (or correlated) with Norsk Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsk Hydro ASA has no effect on the direction of ADRIATIC METALS i.e., ADRIATIC METALS and Norsk Hydro go up and down completely randomly.
Pair Corralation between ADRIATIC METALS and Norsk Hydro
Assuming the 90 days trading horizon ADRIATIC METALS LS 013355 is expected to generate 1.69 times more return on investment than Norsk Hydro. However, ADRIATIC METALS is 1.69 times more volatile than Norsk Hydro ASA. It trades about 0.03 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about -0.13 per unit of risk. If you would invest 240.00 in ADRIATIC METALS LS 013355 on October 25, 2024 and sell it today you would earn a total of 4.00 from holding ADRIATIC METALS LS 013355 or generate 1.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ADRIATIC METALS LS 013355 vs. Norsk Hydro ASA
Performance |
| Timeline |
| ADRIATIC METALS LS |
| Norsk Hydro ASA |
ADRIATIC METALS and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ADRIATIC METALS and Norsk Hydro
The main advantage of trading using opposite ADRIATIC METALS and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADRIATIC METALS position performs unexpectedly, Norsk Hydro 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 Norsk Hydro will offset losses from the drop in Norsk Hydro's long position.| ADRIATIC METALS vs. CAREER EDUCATION | ADRIATIC METALS vs. betterU Education Corp | ADRIATIC METALS vs. Adtalem Global Education | ADRIATIC METALS vs. Perdoceo Education |
| Norsk Hydro vs. Check Point Software | Norsk Hydro vs. VULCAN MATERIALS | Norsk Hydro vs. Summit Materials | Norsk Hydro vs. Casio Computer CoLtd |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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