Correlation Between Norsk Hydro and Alumil Aluminium
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Alumil Aluminium 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 Alumil Aluminium 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 Alumil Aluminium Industry, you can compare the effects of market volatilities on Norsk Hydro and Alumil Aluminium 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 Alumil Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Alumil Aluminium.
Diversification Opportunities for Norsk Hydro and Alumil Aluminium
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norsk and Alumil is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Alumil Aluminium Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumil Aluminium Industry 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 Alumil Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumil Aluminium Industry has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Alumil Aluminium go up and down completely randomly.
Pair Corralation between Norsk Hydro and Alumil Aluminium
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.95 times more return on investment than Alumil Aluminium. However, Norsk Hydro is 1.95 times more volatile than Alumil Aluminium Industry. It trades about 0.07 of its potential returns per unit of risk. Alumil Aluminium Industry is currently generating about 0.09 per unit of risk. If you would invest 322.00 in Norsk Hydro ASA on September 14, 2024 and sell it today you would earn a total of 244.00 from holding Norsk Hydro ASA or generate 75.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.64% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Alumil Aluminium Industry
Performance |
| Timeline |
| Norsk Hydro ASA |
| Alumil Aluminium Industry |
Norsk Hydro and Alumil Aluminium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Alumil Aluminium
The main advantage of trading using opposite Norsk Hydro and Alumil Aluminium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Alumil Aluminium 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 Alumil Aluminium will offset losses from the drop in Alumil Aluminium's long position.| Norsk Hydro vs. Taylor Morrison Home | Norsk Hydro vs. American Homes 4 | Norsk Hydro vs. Haverty Furniture Companies | Norsk Hydro vs. Autohome ADR |
| Alumil Aluminium vs. Norsk Hydro ASA | Alumil Aluminium vs. Aluminum of | Alumil Aluminium vs. Kaiser Aluminum | Alumil Aluminium vs. Superior Plus 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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