Correlation Between Shunfeng International and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Shunfeng International 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 Shunfeng International and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shunfeng International Clean and Norsk Hydro ASA, you can compare the effects of market volatilities on Shunfeng International 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 Shunfeng International with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shunfeng International and Norsk Hydro.
Diversification Opportunities for Shunfeng International and Norsk Hydro
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shunfeng and Norsk is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Shunfeng International Clean 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 Shunfeng 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 Shunfeng International Clean 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 Shunfeng International i.e., Shunfeng International and Norsk Hydro go up and down completely randomly.
Pair Corralation between Shunfeng International and Norsk Hydro
Assuming the 90 days horizon Shunfeng International Clean is expected to under-perform the Norsk Hydro. In addition to that, Shunfeng International is 4.22 times more volatile than Norsk Hydro ASA. It trades about -0.09 of its total potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.03 per unit of volatility. If you would invest 581.00 in Norsk Hydro ASA on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Norsk Hydro ASA or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shunfeng International Clean vs. Norsk Hydro ASA
Performance |
| Timeline |
| Shunfeng International |
| Norsk Hydro ASA |
Shunfeng International and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shunfeng International and Norsk Hydro
The main advantage of trading using opposite Shunfeng International and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shunfeng International 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.| Shunfeng International vs. Sunrun Inc | Shunfeng International vs. SMA Solar Technology | Shunfeng International vs. Superior Plus Corp | Shunfeng International vs. SIVERS SEMICONDUCTORS AB |
| Norsk Hydro vs. Aluminum of | Norsk Hydro vs. Kaiser Aluminum | Norsk Hydro vs. Superior Plus Corp | Norsk Hydro vs. SIVERS SEMICONDUCTORS AB |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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