Correlation Between China Hongqiao and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both China Hongqiao 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 China Hongqiao and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Hongqiao Group and Norsk Hydro ASA, you can compare the effects of market volatilities on China Hongqiao 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 China Hongqiao with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Hongqiao and Norsk Hydro.
Diversification Opportunities for China Hongqiao and Norsk Hydro
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Norsk is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding China Hongqiao Group 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 China Hongqiao 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 China Hongqiao Group 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 China Hongqiao i.e., China Hongqiao and Norsk Hydro go up and down completely randomly.
Pair Corralation between China Hongqiao and Norsk Hydro
Assuming the 90 days horizon China Hongqiao Group is expected to generate 1.94 times more return on investment than Norsk Hydro. However, China Hongqiao is 1.94 times more volatile than Norsk Hydro ASA. It trades about 0.2 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 72.00 in China Hongqiao Group on August 23, 2024 and sell it today you would earn a total of 94.00 from holding China Hongqiao Group or generate 130.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Hongqiao Group vs. Norsk Hydro ASA
Performance |
| Timeline |
| China Hongqiao Group |
| Norsk Hydro ASA |
China Hongqiao and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Hongqiao and Norsk Hydro
The main advantage of trading using opposite China Hongqiao and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Hongqiao 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.| China Hongqiao vs. Kaiser Aluminum | China Hongqiao vs. Century Aluminum | China Hongqiao vs. Constellium Nv | China Hongqiao vs. Alcoa Corp |
| Norsk Hydro vs. Kaiser Aluminum | Norsk Hydro vs. Century Aluminum | Norsk Hydro vs. Constellium Nv | Norsk Hydro vs. Alcoa Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Stocks Directory Find actively traded stocks across global markets | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |