Correlation Between Norsk Hydro and Navamedic ASA
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Navamedic ASA 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 Navamedic ASA 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 Navamedic ASA, you can compare the effects of market volatilities on Norsk Hydro and Navamedic ASA 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 Navamedic ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Navamedic ASA.
Diversification Opportunities for Norsk Hydro and Navamedic ASA
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and Navamedic is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Navamedic ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navamedic 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 Navamedic ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navamedic ASA has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Navamedic ASA go up and down completely randomly.
Pair Corralation between Norsk Hydro and Navamedic ASA
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the Navamedic ASA. But the stock apears to be less risky and, when comparing its historical volatility, Norsk Hydro ASA is 1.54 times less risky than Navamedic ASA. The stock trades about -0.01 of its potential returns per unit of risk. The Navamedic ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,500 in Navamedic ASA on September 2, 2024 and sell it today you would earn a total of 60.00 from holding Navamedic ASA or generate 2.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Navamedic ASA
Performance |
| Timeline |
| Norsk Hydro ASA |
| Navamedic ASA |
Norsk Hydro and Navamedic ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Navamedic ASA
The main advantage of trading using opposite Norsk Hydro and Navamedic ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Navamedic ASA 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 Navamedic ASA will offset losses from the drop in Navamedic ASA's long position.| Norsk Hydro vs. Yara International ASA | Norsk Hydro vs. Equinor ASA | Norsk Hydro vs. Telenor ASA | Norsk Hydro vs. Orkla ASA |
| Navamedic ASA vs. DnB ASA | Navamedic ASA vs. Sparebank 1 SMN | Navamedic ASA vs. Norsk Hydro ASA | Navamedic ASA vs. Equinor 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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