Correlation Between Norsk Hydro and PKSHA TECHNOLOGY
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC, you can compare the effects of market volatilities on Norsk Hydro and PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and PKSHA TECHNOLOGY.
Diversification Opportunities for Norsk Hydro and PKSHA TECHNOLOGY
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and PKSHA is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and PKSHA TECHNOLOGY INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PKSHA TECHNOLOGY INC 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 PKSHA TECHNOLOGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PKSHA TECHNOLOGY INC has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and PKSHA TECHNOLOGY go up and down completely randomly.
Pair Corralation between Norsk Hydro and PKSHA TECHNOLOGY
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.98 times more return on investment than PKSHA TECHNOLOGY. However, Norsk Hydro ASA is 1.02 times less risky than PKSHA TECHNOLOGY. It trades about 0.35 of its potential returns per unit of risk. PKSHA TECHNOLOGY INC is currently generating about -0.25 per unit of risk. If you would invest 529.00 in Norsk Hydro ASA on October 21, 2024 and sell it today you would earn a total of 59.00 from holding Norsk Hydro ASA or generate 11.15% 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. PKSHA TECHNOLOGY INC
Performance |
| Timeline |
| Norsk Hydro ASA |
| PKSHA TECHNOLOGY INC |
Norsk Hydro and PKSHA TECHNOLOGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and PKSHA TECHNOLOGY
The main advantage of trading using opposite Norsk Hydro and PKSHA TECHNOLOGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY will offset losses from the drop in PKSHA TECHNOLOGY's long position.| Norsk Hydro vs. China BlueChemical | Norsk Hydro vs. TOMBADOR IRON LTD | Norsk Hydro vs. Mitsui Chemicals | Norsk Hydro vs. Olympic Steel |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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