Correlation Between Japan Asia and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Japan Asia 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 Japan Asia and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Asia Investment and Norsk Hydro ASA, you can compare the effects of market volatilities on Japan Asia 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 Japan Asia with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Asia and Norsk Hydro.
Diversification Opportunities for Japan Asia and Norsk Hydro
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Japan and Norsk is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Japan Asia Investment 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 Japan Asia 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 Japan Asia Investment 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 Japan Asia i.e., Japan Asia and Norsk Hydro go up and down completely randomly.
Pair Corralation between Japan Asia and Norsk Hydro
Assuming the 90 days horizon Japan Asia Investment is expected to generate 1.19 times more return on investment than Norsk Hydro. However, Japan Asia is 1.19 times more volatile than Norsk Hydro ASA. It trades about -0.12 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about -0.23 per unit of risk. If you would invest 130.00 in Japan Asia Investment on October 11, 2024 and sell it today you would lose (5.00) from holding Japan Asia Investment or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Asia Investment vs. Norsk Hydro ASA
Performance |
| Timeline |
| Japan Asia Investment |
| Norsk Hydro ASA |
Japan Asia and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Asia and Norsk Hydro
The main advantage of trading using opposite Japan Asia and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Asia 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.| Japan Asia vs. BOS BETTER ONLINE | Japan Asia vs. CARSALESCOM | Japan Asia vs. MUTUIONLINE | Japan Asia vs. NEWELL RUBBERMAID |
| Norsk Hydro vs. PennyMac Mortgage Investment | Norsk Hydro vs. Shenzhen Investment Limited | Norsk Hydro vs. Cal Maine Foods | 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |