Correlation Between Norsk Hydro and Graphic Packaging
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Graphic Packaging 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 Graphic Packaging 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 Graphic Packaging Holding, you can compare the effects of market volatilities on Norsk Hydro and Graphic Packaging 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 Graphic Packaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Graphic Packaging.
Diversification Opportunities for Norsk Hydro and Graphic Packaging
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norsk and Graphic is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Graphic Packaging Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphic Packaging Holding 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 Graphic Packaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphic Packaging Holding has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Graphic Packaging go up and down completely randomly.
Pair Corralation between Norsk Hydro and Graphic Packaging
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 2.42 times more return on investment than Graphic Packaging. However, Norsk Hydro is 2.42 times more volatile than Graphic Packaging Holding. It trades about 0.07 of its potential returns per unit of risk. Graphic Packaging Holding is currently generating about 0.1 per unit of risk. If you would invest 552.00 in Norsk Hydro ASA on September 13, 2024 and sell it today you would earn a total of 20.00 from holding Norsk Hydro ASA or generate 3.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Graphic Packaging Holding
Performance |
| Timeline |
| Norsk Hydro ASA |
| Graphic Packaging Holding |
Norsk Hydro and Graphic Packaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Graphic Packaging
The main advantage of trading using opposite Norsk Hydro and Graphic Packaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Graphic Packaging 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 Graphic Packaging will offset losses from the drop in Graphic Packaging'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 |
| Graphic Packaging vs. Packaging of | Graphic Packaging vs. Superior Plus Corp | Graphic Packaging vs. SIVERS SEMICONDUCTORS AB | Graphic Packaging 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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