Correlation Between Norsk Hydro and Ultimovacs ASA
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Ultimovacs 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 Ultimovacs 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 Ultimovacs ASA, you can compare the effects of market volatilities on Norsk Hydro and Ultimovacs 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 Ultimovacs ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Ultimovacs ASA.
Diversification Opportunities for Norsk Hydro and Ultimovacs ASA
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and Ultimovacs is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Ultimovacs ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultimovacs 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 Ultimovacs ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultimovacs ASA has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Ultimovacs ASA go up and down completely randomly.
Pair Corralation between Norsk Hydro and Ultimovacs ASA
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.28 times more return on investment than Ultimovacs ASA. However, Norsk Hydro ASA is 3.52 times less risky than Ultimovacs ASA. It trades about 0.02 of its potential returns per unit of risk. Ultimovacs ASA is currently generating about -0.09 per unit of risk. If you would invest 6,548 in Norsk Hydro ASA on September 3, 2024 and sell it today you would earn a total of 282.00 from holding Norsk Hydro ASA or generate 4.31% 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. Ultimovacs ASA
Performance |
| Timeline |
| Norsk Hydro ASA |
| Ultimovacs ASA |
Norsk Hydro and Ultimovacs ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Ultimovacs ASA
The main advantage of trading using opposite Norsk Hydro and Ultimovacs ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Ultimovacs 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 Ultimovacs ASA will offset losses from the drop in Ultimovacs 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 |
| Ultimovacs ASA vs. Bergenbio ASA | Ultimovacs ASA vs. Nykode Therapeutics ASA | Ultimovacs ASA vs. PCI Biotech Holding |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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