Correlation Between INTER CARS and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both INTER CARS 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 INTER CARS and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and Norsk Hydro ASA, you can compare the effects of market volatilities on INTER CARS 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 INTER CARS with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and Norsk Hydro.
Diversification Opportunities for INTER CARS and Norsk Hydro
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INTER and Norsk is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA 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 INTER CARS 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 INTER CARS SA 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 INTER CARS i.e., INTER CARS and Norsk Hydro go up and down completely randomly.
Pair Corralation between INTER CARS and Norsk Hydro
Assuming the 90 days horizon INTER CARS SA is expected to generate 0.73 times more return on investment than Norsk Hydro. However, INTER CARS SA is 1.37 times less risky than Norsk Hydro. It trades about 0.04 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.01 per unit of risk. If you would invest 12,010 in INTER CARS SA on November 7, 2024 and sell it today you would earn a total of 1,330 from holding INTER CARS SA or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. Norsk Hydro ASA
Performance |
| Timeline |
| INTER CARS SA |
| Norsk Hydro ASA |
INTER CARS and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and Norsk Hydro
The main advantage of trading using opposite INTER CARS and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS 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.| INTER CARS vs. US Physical Therapy | INTER CARS vs. Phibro Animal Health | INTER CARS vs. CLOVER HEALTH INV | INTER CARS vs. PennantPark Investment |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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