Correlation Between HP and NORSK
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By analyzing existing cross correlation between HP Inc and NORSK HYDRO A, you can compare the effects of market volatilities on HP and NORSK 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 HP with a short position of NORSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of HP and NORSK.
Diversification Opportunities for HP and NORSK
Weak diversification
The 3 months correlation between HP and NORSK is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding HP Inc and NORSK HYDRO A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORSK HYDRO A and HP 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 HP Inc are associated (or correlated) with NORSK. 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 A has no effect on the direction of HP i.e., HP and NORSK go up and down completely randomly.
Pair Corralation between HP and NORSK
Considering the 90-day investment horizon HP Inc is expected to under-perform the NORSK. In addition to that, HP is 1.91 times more volatile than NORSK HYDRO A. It trades about -0.09 of its total potential returns per unit of risk. NORSK HYDRO A is currently generating about -0.11 per unit of volatility. If you would invest 10,742 in NORSK HYDRO A on October 26, 2024 and sell it today you would lose (89.00) from holding NORSK HYDRO A or give up 0.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 63.16% |
| Values | Daily Returns |
HP Inc vs. NORSK HYDRO A
Performance |
| Timeline |
| HP Inc |
| NORSK HYDRO A |
HP and NORSK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HP and NORSK
The main advantage of trading using opposite HP and NORSK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HP position performs unexpectedly, NORSK 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 will offset losses from the drop in NORSK's long position.The idea behind HP Inc and NORSK HYDRO A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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