Correlation Between Norsk Hydro and Man Wah
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Man Wah 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 Man Wah 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 Man Wah Holdings, you can compare the effects of market volatilities on Norsk Hydro and Man Wah 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 Man Wah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Man Wah.
Diversification Opportunities for Norsk Hydro and Man Wah
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Norsk and Man is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Man Wah Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Man Wah Holdings 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 Man Wah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Man Wah Holdings has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Man Wah go up and down completely randomly.
Pair Corralation between Norsk Hydro and Man Wah
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.68 times more return on investment than Man Wah. However, Norsk Hydro ASA is 1.47 times less risky than Man Wah. It trades about 0.0 of its potential returns per unit of risk. Man Wah Holdings is currently generating about -0.03 per unit of risk. If you would invest 549.00 in Norsk Hydro ASA on October 15, 2024 and sell it today you would lose (1.00) from holding Norsk Hydro ASA or give up 0.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Man Wah Holdings
Performance |
| Timeline |
| Norsk Hydro ASA |
| Man Wah Holdings |
Norsk Hydro and Man Wah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Man Wah
The main advantage of trading using opposite Norsk Hydro and Man Wah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Man Wah 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 Man Wah will offset losses from the drop in Man Wah's long position.| Norsk Hydro vs. MHP Hotel AG | Norsk Hydro vs. InterContinental Hotels Group | Norsk Hydro vs. COVIVIO HOTELS INH | Norsk Hydro vs. MOVIE GAMES SA |
| Man Wah vs. SK TELECOM TDADR | Man Wah vs. Zoom Video Communications | Man Wah vs. INTERSHOP Communications Aktiengesellschaft | Man Wah vs. COMBA TELECOM SYST |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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