Correlation Between USWE SPORTS and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both USWE SPORTS 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 USWE SPORTS and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USWE SPORTS AB and Norsk Hydro ASA, you can compare the effects of market volatilities on USWE SPORTS 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 USWE SPORTS with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of USWE SPORTS and Norsk Hydro.
Diversification Opportunities for USWE SPORTS and Norsk Hydro
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between USWE and Norsk is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding USWE SPORTS AB 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 USWE SPORTS 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 USWE SPORTS AB 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 USWE SPORTS i.e., USWE SPORTS and Norsk Hydro go up and down completely randomly.
Pair Corralation between USWE SPORTS and Norsk Hydro
Assuming the 90 days horizon USWE SPORTS AB is expected to under-perform the Norsk Hydro. In addition to that, USWE SPORTS is 1.14 times more volatile than Norsk Hydro ASA. It trades about -0.02 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 439.00 in Norsk Hydro ASA on October 11, 2024 and sell it today you would earn a total of 98.00 from holding Norsk Hydro ASA or generate 22.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
USWE SPORTS AB vs. Norsk Hydro ASA
Performance |
| Timeline |
| USWE SPORTS AB |
| Norsk Hydro ASA |
USWE SPORTS and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USWE SPORTS and Norsk Hydro
The main advantage of trading using opposite USWE SPORTS and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USWE SPORTS 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.| USWE SPORTS vs. China Datang | USWE SPORTS vs. Datadog | USWE SPORTS vs. KENEDIX OFFICE INV | USWE SPORTS vs. Tower One Wireless |
| Norsk Hydro vs. WT OFFSHORE | Norsk Hydro vs. YATRA ONLINE DL 0001 | Norsk Hydro vs. USWE SPORTS AB | Norsk Hydro vs. SPORTING |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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