Correlation Between Havila Shipping and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Havila Shipping 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 Havila Shipping and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Havila Shipping ASA and Norsk Hydro ASA, you can compare the effects of market volatilities on Havila Shipping 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 Havila Shipping with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Havila Shipping and Norsk Hydro.
Diversification Opportunities for Havila Shipping and Norsk Hydro
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Havila and Norsk is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Havila Shipping ASA 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 Havila Shipping 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 Havila Shipping ASA 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 Havila Shipping i.e., Havila Shipping and Norsk Hydro go up and down completely randomly.
Pair Corralation between Havila Shipping and Norsk Hydro
Assuming the 90 days trading horizon Havila Shipping ASA is expected to under-perform the Norsk Hydro. In addition to that, Havila Shipping is 1.19 times more volatile than Norsk Hydro ASA. It trades about -0.17 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 6,866 in Norsk Hydro ASA on August 31, 2024 and sell it today you would lose (26.00) from holding Norsk Hydro ASA or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Havila Shipping ASA vs. Norsk Hydro ASA
Performance |
| Timeline |
| Havila Shipping ASA |
| Norsk Hydro ASA |
Havila Shipping and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Havila Shipping and Norsk Hydro
The main advantage of trading using opposite Havila Shipping and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Havila Shipping 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.| Havila Shipping vs. DnB ASA | Havila Shipping vs. Mowi ASA | Havila Shipping vs. Yara International ASA | Havila Shipping vs. Telenor ASA |
| Norsk Hydro vs. Yara International ASA | Norsk Hydro vs. Equinor ASA | Norsk Hydro vs. Telenor ASA | Norsk Hydro vs. Orkla ASA |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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