Correlation Between Norsk Hydro and Datadog
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Datadog 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 Datadog 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 Datadog, you can compare the effects of market volatilities on Norsk Hydro and Datadog 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 Datadog. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Datadog.
Diversification Opportunities for Norsk Hydro and Datadog
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Norsk and Datadog is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Datadog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datadog 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 Datadog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datadog has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Datadog go up and down completely randomly.
Pair Corralation between Norsk Hydro and Datadog
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the Datadog. But the stock apears to be less risky and, when comparing its historical volatility, Norsk Hydro ASA is 1.09 times less risky than Datadog. The stock trades about -0.02 of its potential returns per unit of risk. The Datadog is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 11,872 in Datadog on September 13, 2024 and sell it today you would earn a total of 3,258 from holding Datadog or generate 27.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Datadog
Performance |
| Timeline |
| Norsk Hydro ASA |
| Datadog |
Norsk Hydro and Datadog Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Datadog
The main advantage of trading using opposite Norsk Hydro and Datadog positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Datadog 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 Datadog will offset losses from the drop in Datadog'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 |
| Datadog vs. Superior Plus Corp | Datadog vs. SIVERS SEMICONDUCTORS AB | Datadog vs. NorAm Drilling AS | Datadog 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |