Correlation Between Norsk Hydro and Alumina
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Alumina 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 Alumina 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 Alumina Limited, you can compare the effects of market volatilities on Norsk Hydro and Alumina 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 Alumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Alumina.
Diversification Opportunities for Norsk Hydro and Alumina
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and Alumina is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Alumina Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumina Limited 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 Alumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumina Limited has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Alumina go up and down completely randomly.
Pair Corralation between Norsk Hydro and Alumina
If you would invest 111.00 in Alumina Limited on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Alumina Limited or generate 0.0% 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. Alumina Limited
Performance |
| Timeline |
| Norsk Hydro ASA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Alumina Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Norsk Hydro and Alumina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Alumina
The main advantage of trading using opposite Norsk Hydro and Alumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Alumina 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 Alumina will offset losses from the drop in Alumina's long position.| Norsk Hydro vs. Kaiser Aluminum | Norsk Hydro vs. Century Aluminum | Norsk Hydro vs. China Hongqiao Group | Norsk Hydro vs. Alcoa Corp |
| Alumina vs. Kinetik Holdings | Alumina vs. Atmos Energy | Alumina vs. Kenon Holdings | Alumina vs. Alliant Energy Corp |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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