Correlation Between Norsk Hydro and Green Minerals
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Green Minerals 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 Norsk Hydro and Green Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norsk Hydro ASA and Green Minerals AS, you can compare the effects of market volatilities on Norsk Hydro and Green Minerals 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 Norsk Hydro with a short position of Green Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Green Minerals.
Diversification Opportunities for Norsk Hydro and Green Minerals
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Norsk and Green is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Green Minerals AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Minerals AS and Norsk Hydro 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 Norsk Hydro ASA are associated (or correlated) with Green Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Minerals AS has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Green Minerals go up and down completely randomly.
Pair Corralation between Norsk Hydro and Green Minerals
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.38 times more return on investment than Green Minerals. However, Norsk Hydro ASA is 2.66 times less risky than Green Minerals. It trades about 0.04 of its potential returns per unit of risk. Green Minerals AS is currently generating about 0.0 per unit of risk. If you would invest 5,713 in Norsk Hydro ASA on November 3, 2024 and sell it today you would earn a total of 983.00 from holding Norsk Hydro ASA or generate 17.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Green Minerals AS
Performance |
| Timeline |
| Norsk Hydro ASA |
| Green Minerals AS |
Norsk Hydro and Green Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Green Minerals
The main advantage of trading using opposite Norsk Hydro and Green Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Green Minerals 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 Green Minerals will offset losses from the drop in Green Minerals' long position.| Norsk Hydro vs. Yara International ASA | Norsk Hydro vs. Equinor ASA | Norsk Hydro vs. Telenor ASA | Norsk Hydro vs. Orkla ASA |
| Green Minerals vs. SpareBank 1 stlandet | Green Minerals vs. Kraft Bank Asa | Green Minerals vs. Bien Sparebank ASA | Green Minerals vs. Nordic Mining 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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