Correlation Between Norsk Hydro and Nykode Therapeutics
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Nykode Therapeutics 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 Nykode Therapeutics 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 Nykode Therapeutics ASA, you can compare the effects of market volatilities on Norsk Hydro and Nykode Therapeutics 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 Nykode Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Nykode Therapeutics.
Diversification Opportunities for Norsk Hydro and Nykode Therapeutics
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Norsk and Nykode is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Nykode Therapeutics ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nykode Therapeutics 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 Nykode Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nykode Therapeutics ASA has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Nykode Therapeutics go up and down completely randomly.
Pair Corralation between Norsk Hydro and Nykode Therapeutics
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.43 times more return on investment than Nykode Therapeutics. However, Norsk Hydro ASA is 2.34 times less risky than Nykode Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Nykode Therapeutics ASA is currently generating about -0.09 per unit of risk. If you would invest 7,168 in Norsk Hydro ASA on September 1, 2024 and sell it today you would lose (338.00) from holding Norsk Hydro ASA or give up 4.72% 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. Nykode Therapeutics ASA
Performance |
| Timeline |
| Norsk Hydro ASA |
| Nykode Therapeutics ASA |
Norsk Hydro and Nykode Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Nykode Therapeutics
The main advantage of trading using opposite Norsk Hydro and Nykode Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Nykode Therapeutics 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 Nykode Therapeutics will offset losses from the drop in Nykode Therapeutics' long position.| Norsk Hydro vs. Yara International ASA | Norsk Hydro vs. Equinor ASA | Norsk Hydro vs. Telenor ASA | Norsk Hydro vs. Orkla ASA |
| Nykode Therapeutics vs. Equinor ASA | Nykode Therapeutics vs. DnB ASA | Nykode Therapeutics vs. Aker BP ASA | Nykode Therapeutics 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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