Correlation Between Nel ASA and Hunter Group
Can any of the company-specific risk be diversified away by investing in both Nel ASA and Hunter Group 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 Nel ASA and Hunter Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nel ASA and Hunter Group ASA, you can compare the effects of market volatilities on Nel ASA and Hunter Group 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 Nel ASA with a short position of Hunter Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nel ASA and Hunter Group.
Diversification Opportunities for Nel ASA and Hunter Group
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nel and Hunter is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and Hunter Group ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunter Group ASA and Nel ASA 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 Nel ASA are associated (or correlated) with Hunter Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunter Group ASA has no effect on the direction of Nel ASA i.e., Nel ASA and Hunter Group go up and down completely randomly.
Pair Corralation between Nel ASA and Hunter Group
Assuming the 90 days trading horizon Nel ASA is expected to under-perform the Hunter Group. But the stock apears to be less risky and, when comparing its historical volatility, Nel ASA is 1.6 times less risky than Hunter Group. The stock trades about -0.43 of its potential returns per unit of risk. The Hunter Group ASA is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest 170.00 in Hunter Group ASA on August 28, 2024 and sell it today you would lose (26.00) from holding Hunter Group ASA or give up 15.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nel ASA vs. Hunter Group ASA
Performance |
| Timeline |
| Nel ASA |
| Hunter Group ASA |
Nel ASA and Hunter Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nel ASA and Hunter Group
The main advantage of trading using opposite Nel ASA and Hunter Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nel ASA position performs unexpectedly, Hunter Group 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 Hunter Group will offset losses from the drop in Hunter Group's long position.| Nel ASA vs. Eidesvik Offshore ASA | Nel ASA vs. Kitron ASA | Nel ASA vs. Havila Shipping ASA | Nel ASA vs. Elkem ASA |
| Hunter Group vs. FLEX LNG | Hunter Group vs. Elkem ASA | Hunter Group vs. DNB NOR KAPFORV | Hunter Group vs. Integrated Wind Solutions |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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