Correlation Between CompuGroup Medical and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both CompuGroup Medical 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 CompuGroup Medical and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CompuGroup Medical SE and Norsk Hydro ASA, you can compare the effects of market volatilities on CompuGroup Medical 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 CompuGroup Medical with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of CompuGroup Medical and Norsk Hydro.
Diversification Opportunities for CompuGroup Medical and Norsk Hydro
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CompuGroup and Norsk is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CompuGroup Medical SE 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 CompuGroup Medical 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 CompuGroup Medical SE 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 CompuGroup Medical i.e., CompuGroup Medical and Norsk Hydro go up and down completely randomly.
Pair Corralation between CompuGroup Medical and Norsk Hydro
Assuming the 90 days trading horizon CompuGroup Medical SE is expected to under-perform the Norsk Hydro. In addition to that, CompuGroup Medical is 1.38 times more volatile than Norsk Hydro ASA. It trades about -0.01 of its total potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.01 per unit of volatility. If you would invest 551.00 in Norsk Hydro ASA on November 7, 2024 and sell it today you would lose (1.00) from holding Norsk Hydro ASA or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CompuGroup Medical SE vs. Norsk Hydro ASA
Performance |
| Timeline |
| CompuGroup Medical |
| Norsk Hydro ASA |
CompuGroup Medical and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CompuGroup Medical and Norsk Hydro
The main advantage of trading using opposite CompuGroup Medical and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CompuGroup Medical 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.| CompuGroup Medical vs. AGNC INVESTMENT | CompuGroup Medical vs. Gladstone Investment | CompuGroup Medical vs. SEI INVESTMENTS | CompuGroup Medical vs. Minerals Technologies |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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