Correlation Between Norsk Hydro and Beijing Media
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Beijing Media 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 Beijing Media 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 Beijing Media, you can compare the effects of market volatilities on Norsk Hydro and Beijing Media 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 Beijing Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Beijing Media.
Diversification Opportunities for Norsk Hydro and Beijing Media
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norsk and Beijing is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Media 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 Beijing Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Media has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Beijing Media go up and down completely randomly.
Pair Corralation between Norsk Hydro and Beijing Media
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.59 times more return on investment than Beijing Media. However, Norsk Hydro ASA is 1.7 times less risky than Beijing Media. It trades about 0.06 of its potential returns per unit of risk. Beijing Media is currently generating about 0.02 per unit of risk. If you would invest 326.00 in Norsk Hydro ASA on September 12, 2024 and sell it today you would earn a total of 262.00 from holding Norsk Hydro ASA or generate 80.37% 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. Beijing Media
Performance |
| Timeline |
| Norsk Hydro ASA |
| Beijing Media |
Norsk Hydro and Beijing Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Beijing Media
The main advantage of trading using opposite Norsk Hydro and Beijing Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Beijing Media 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 Beijing Media will offset losses from the drop in Beijing Media's long position.| Norsk Hydro vs. Aluminum of | Norsk Hydro vs. Kaiser Aluminum | Norsk Hydro vs. Superior Plus Corp | Norsk Hydro vs. SIVERS SEMICONDUCTORS AB |
| Beijing Media vs. Superior Plus Corp | Beijing Media vs. SIVERS SEMICONDUCTORS AB | Beijing Media vs. NorAm Drilling AS | Beijing Media 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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