Correlation Between Chengdu PUTIAN and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Chengdu PUTIAN 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 Chengdu PUTIAN and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chengdu PUTIAN Telecommunications and Norsk Hydro ASA, you can compare the effects of market volatilities on Chengdu PUTIAN 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 Chengdu PUTIAN with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu PUTIAN and Norsk Hydro.
Diversification Opportunities for Chengdu PUTIAN and Norsk Hydro
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Chengdu and Norsk is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu PUTIAN Telecommunicati 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 Chengdu PUTIAN 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 Chengdu PUTIAN Telecommunications 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 Chengdu PUTIAN i.e., Chengdu PUTIAN and Norsk Hydro go up and down completely randomly.
Pair Corralation between Chengdu PUTIAN and Norsk Hydro
Assuming the 90 days trading horizon Chengdu PUTIAN Telecommunications is expected to generate 2.07 times more return on investment than Norsk Hydro. However, Chengdu PUTIAN is 2.07 times more volatile than Norsk Hydro ASA. It trades about 0.02 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.02 per unit of risk. If you would invest 10.00 in Chengdu PUTIAN Telecommunications on October 12, 2024 and sell it today you would lose (2.65) from holding Chengdu PUTIAN Telecommunications or give up 26.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu PUTIAN Telecommunicati vs. Norsk Hydro ASA
Performance |
| Timeline |
| Chengdu PUTIAN Telec |
| Norsk Hydro ASA |
Chengdu PUTIAN and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu PUTIAN and Norsk Hydro
The main advantage of trading using opposite Chengdu PUTIAN and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu PUTIAN 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.| Chengdu PUTIAN vs. ZTE Corporation | Chengdu PUTIAN vs. Superior Plus Corp | Chengdu PUTIAN vs. NMI Holdings | Chengdu PUTIAN vs. SIVERS SEMICONDUCTORS AB |
| Norsk Hydro vs. PTT Global Chemical | Norsk Hydro vs. X FAB Silicon Foundries | Norsk Hydro vs. TRI CHEMICAL LABORATINC | Norsk Hydro vs. Japan Asia Investment |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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