Correlation Between PT Ace and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both PT Ace 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 PT Ace and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Ace Hardware and Norsk Hydro ASA, you can compare the effects of market volatilities on PT Ace 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 PT Ace with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Ace and Norsk Hydro.
Diversification Opportunities for PT Ace and Norsk Hydro
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 4AH1 and Norsk is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding PT Ace Hardware 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 PT Ace 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 PT Ace Hardware 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 PT Ace i.e., PT Ace and Norsk Hydro go up and down completely randomly.
Pair Corralation between PT Ace and Norsk Hydro
Assuming the 90 days trading horizon PT Ace Hardware is expected to generate 1.27 times more return on investment than Norsk Hydro. However, PT Ace is 1.27 times more volatile than Norsk Hydro ASA. It trades about -0.08 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about -0.26 per unit of risk. If you would invest 4.15 in PT Ace Hardware on September 19, 2024 and sell it today you would lose (0.15) from holding PT Ace Hardware or give up 3.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Ace Hardware vs. Norsk Hydro ASA
Performance |
| Timeline |
| PT Ace Hardware |
| Norsk Hydro ASA |
PT Ace and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Ace and Norsk Hydro
The main advantage of trading using opposite PT Ace and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Ace 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.| PT Ace vs. Superior Plus Corp | PT Ace vs. SIVERS SEMICONDUCTORS AB | PT Ace vs. NorAm Drilling AS | PT Ace vs. Norsk Hydro ASA |
| Norsk Hydro vs. T MOBILE US | Norsk Hydro vs. PT Ace Hardware | Norsk Hydro vs. Align Technology | Norsk Hydro vs. SMA Solar Technology |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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