Correlation Between Norsk Hydro and Boiron SA
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Boiron SA 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 Boiron SA 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 Boiron SA, you can compare the effects of market volatilities on Norsk Hydro and Boiron SA 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 Boiron SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Boiron SA.
Diversification Opportunities for Norsk Hydro and Boiron SA
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and Boiron is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA 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 Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Boiron SA go up and down completely randomly.
Pair Corralation between Norsk Hydro and Boiron SA
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the Boiron SA. But the stock apears to be less risky and, when comparing its historical volatility, Norsk Hydro ASA is 2.53 times less risky than Boiron SA. The stock trades about -0.54 of its potential returns per unit of risk. The Boiron SA is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 2,960 in Boiron SA on September 21, 2024 and sell it today you would lose (290.00) from holding Boiron SA or give up 9.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Boiron SA
Performance |
| Timeline |
| Norsk Hydro ASA |
| Boiron SA |
Norsk Hydro and Boiron SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Boiron SA
The main advantage of trading using opposite Norsk Hydro and Boiron SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Boiron SA 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 Boiron SA will offset losses from the drop in Boiron SA'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 |
| Boiron SA vs. Superior Plus Corp | Boiron SA vs. SIVERS SEMICONDUCTORS AB | Boiron SA vs. NorAm Drilling AS | Boiron SA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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