Correlation Between Norsk Hydro and SANOK RUBBER
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and SANOK RUBBER 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 SANOK RUBBER 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 SANOK RUBBER ZY, you can compare the effects of market volatilities on Norsk Hydro and SANOK RUBBER 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 SANOK RUBBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and SANOK RUBBER.
Diversification Opportunities for Norsk Hydro and SANOK RUBBER
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Norsk and SANOK is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY 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 SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and SANOK RUBBER go up and down completely randomly.
Pair Corralation between Norsk Hydro and SANOK RUBBER
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the SANOK RUBBER. In addition to that, Norsk Hydro is 2.82 times more volatile than SANOK RUBBER ZY. It trades about -0.03 of its total potential returns per unit of risk. SANOK RUBBER ZY is currently generating about -0.01 per unit of volatility. If you would invest 453.00 in SANOK RUBBER ZY on September 13, 2024 and sell it today you would lose (2.00) from holding SANOK RUBBER ZY or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. SANOK RUBBER ZY
Performance |
| Timeline |
| Norsk Hydro ASA |
| SANOK RUBBER ZY |
Norsk Hydro and SANOK RUBBER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and SANOK RUBBER
The main advantage of trading using opposite Norsk Hydro and SANOK RUBBER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, SANOK RUBBER 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 SANOK RUBBER will offset losses from the drop in SANOK RUBBER's long position.| Norsk Hydro vs. Goosehead Insurance | Norsk Hydro vs. RETAIL FOOD GROUP | Norsk Hydro vs. COSTCO WHOLESALE CDR | Norsk Hydro vs. SBI Insurance Group |
| SANOK RUBBER vs. Bridgestone | SANOK RUBBER vs. Superior Plus Corp | SANOK RUBBER vs. SIVERS SEMICONDUCTORS AB | SANOK RUBBER vs. Norsk Hydro 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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