Correlation Between Norsk Hydro and Hunter Group
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro 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 Norsk Hydro and Hunter Group 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 Hunter Group ASA, you can compare the effects of market volatilities on Norsk Hydro 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 Norsk Hydro with a short position of Hunter Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Hunter Group.
Diversification Opportunities for Norsk Hydro and Hunter Group
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and Hunter is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro 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 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 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 Norsk Hydro i.e., Norsk Hydro and Hunter Group go up and down completely randomly.
Pair Corralation between Norsk Hydro and Hunter Group
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.4 times more return on investment than Hunter Group. However, Norsk Hydro ASA is 2.53 times less risky than Hunter Group. It trades about 0.11 of its potential returns per unit of risk. Hunter Group ASA is currently generating about -0.05 per unit of risk. If you would invest 6,766 in Norsk Hydro ASA on August 25, 2024 and sell it today you would earn a total of 382.00 from holding Norsk Hydro ASA or generate 5.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Hunter Group ASA
Performance |
| Timeline |
| Norsk Hydro ASA |
| Hunter Group ASA |
Norsk Hydro and Hunter Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Hunter Group
The main advantage of trading using opposite Norsk Hydro and Hunter Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro 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.| Norsk Hydro vs. Yara International ASA | Norsk Hydro vs. Equinor ASA | Norsk Hydro vs. Telenor ASA | Norsk Hydro vs. Orkla ASA |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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