Correlation Between Norsk Hydro and Hermana Holding
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Hermana Holding 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 Hermana Holding 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 Hermana Holding ASA, you can compare the effects of market volatilities on Norsk Hydro and Hermana Holding 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 Hermana Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Hermana Holding.
Diversification Opportunities for Norsk Hydro and Hermana Holding
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and Hermana is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Hermana Holding ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hermana Holding ASA 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 Hermana Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hermana Holding ASA has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Hermana Holding go up and down completely randomly.
Pair Corralation between Norsk Hydro and Hermana Holding
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.78 times more return on investment than Hermana Holding. However, Norsk Hydro ASA is 1.28 times less risky than Hermana Holding. It trades about -0.02 of its potential returns per unit of risk. Hermana Holding ASA is currently generating about -0.29 per unit of risk. If you would invest 6,594 in Norsk Hydro ASA on September 15, 2024 and sell it today you would lose (80.00) from holding Norsk Hydro ASA or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Hermana Holding ASA
Performance |
| Timeline |
| Norsk Hydro ASA |
| Hermana Holding ASA |
Norsk Hydro and Hermana Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Hermana Holding
The main advantage of trading using opposite Norsk Hydro and Hermana Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Hermana Holding 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 Hermana Holding will offset losses from the drop in Hermana Holding's long position.| Norsk Hydro vs. Equinor ASA | Norsk Hydro vs. Telenor ASA | Norsk Hydro vs. Orkla ASA | Norsk Hydro vs. DnB ASA |
| Hermana Holding vs. Equinor ASA | Hermana Holding vs. DnB ASA | Hermana Holding vs. Aker BP ASA | Hermana Holding vs. Telenor 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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