Correlation Between Allegheny Technologies and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Allegheny Technologies 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 Allegheny Technologies and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allegheny Technologies Incorporated and Norsk Hydro ASA, you can compare the effects of market volatilities on Allegheny Technologies 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 Allegheny Technologies with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allegheny Technologies and Norsk Hydro.
Diversification Opportunities for Allegheny Technologies and Norsk Hydro
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Allegheny and Norsk is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Allegheny Technologies Incorpo 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 Allegheny Technologies 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 Allegheny Technologies Incorporated 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 Allegheny Technologies i.e., Allegheny Technologies and Norsk Hydro go up and down completely randomly.
Pair Corralation between Allegheny Technologies and Norsk Hydro
Assuming the 90 days horizon Allegheny Technologies Incorporated is expected to generate 0.5 times more return on investment than Norsk Hydro. However, Allegheny Technologies Incorporated is 2.01 times less risky than Norsk Hydro. It trades about 0.03 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about -0.08 per unit of risk. If you would invest 5,312 in Allegheny Technologies Incorporated on October 14, 2024 and sell it today you would earn a total of 22.00 from holding Allegheny Technologies Incorporated or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Allegheny Technologies Incorpo vs. Norsk Hydro ASA
Performance |
| Timeline |
| Allegheny Technologies |
| Norsk Hydro ASA |
Allegheny Technologies and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Allegheny Technologies and Norsk Hydro
The main advantage of trading using opposite Allegheny Technologies and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allegheny Technologies 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.| Allegheny Technologies vs. Superior Plus Corp | Allegheny Technologies vs. NMI Holdings | Allegheny Technologies vs. SIVERS SEMICONDUCTORS AB | Allegheny Technologies vs. Talanx AG |
| Norsk Hydro vs. MHP Hotel AG | Norsk Hydro vs. InterContinental Hotels Group | Norsk Hydro vs. COVIVIO HOTELS INH | Norsk Hydro vs. MOVIE GAMES SA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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