Correlation Between Gaztransport Technigaz and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Gaztransport Technigaz 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 Gaztransport Technigaz and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaztransport Technigaz SA and Norsk Hydro ASA, you can compare the effects of market volatilities on Gaztransport Technigaz 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 Gaztransport Technigaz with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaztransport Technigaz and Norsk Hydro.
Diversification Opportunities for Gaztransport Technigaz and Norsk Hydro
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gaztransport and Norsk is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Gaztransport Technigaz 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 Gaztransport Technigaz 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 Gaztransport Technigaz 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 Gaztransport Technigaz i.e., Gaztransport Technigaz and Norsk Hydro go up and down completely randomly.
Pair Corralation between Gaztransport Technigaz and Norsk Hydro
Assuming the 90 days horizon Gaztransport Technigaz is expected to generate 1.55 times less return on investment than Norsk Hydro. But when comparing it to its historical volatility, Gaztransport Technigaz SA is 1.89 times less risky than Norsk Hydro. It trades about 0.14 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 520.00 in Norsk Hydro ASA on August 25, 2024 and sell it today you would earn a total of 75.00 from holding Norsk Hydro ASA or generate 14.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaztransport Technigaz SA vs. Norsk Hydro ASA
Performance |
| Timeline |
| Gaztransport Technigaz |
| Norsk Hydro ASA |
Gaztransport Technigaz and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaztransport Technigaz and Norsk Hydro
The main advantage of trading using opposite Gaztransport Technigaz and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaztransport Technigaz 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.| Gaztransport Technigaz vs. X FAB Silicon Foundries | Gaztransport Technigaz vs. QUEEN S ROAD | Gaztransport Technigaz vs. MACOM Technology Solutions | Gaztransport Technigaz vs. Amkor Technology |
| Norsk Hydro vs. Big 5 Sporting | Norsk Hydro vs. COLUMBIA SPORTSWEAR | Norsk Hydro vs. Gaztransport Technigaz SA | Norsk Hydro vs. PSI Software AG |
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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