Correlation Between Norsk Hydro and Casio Computer
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Casio Computer 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 Casio Computer 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 Casio Computer CoLtd, you can compare the effects of market volatilities on Norsk Hydro and Casio Computer 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 Casio Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Casio Computer.
Diversification Opportunities for Norsk Hydro and Casio Computer
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and Casio is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Casio Computer CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Casio Computer CoLtd 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 Casio Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Casio Computer CoLtd has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Casio Computer go up and down completely randomly.
Pair Corralation between Norsk Hydro and Casio Computer
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the Casio Computer. But the stock apears to be less risky and, when comparing its historical volatility, Norsk Hydro ASA is 1.67 times less risky than Casio Computer. The stock trades about -0.59 of its potential returns per unit of risk. The Casio Computer CoLtd is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 653.00 in Casio Computer CoLtd on September 22, 2024 and sell it today you would earn a total of 130.00 from holding Casio Computer CoLtd or generate 19.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Casio Computer CoLtd
Performance |
| Timeline |
| Norsk Hydro ASA |
| Casio Computer CoLtd |
Norsk Hydro and Casio Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Casio Computer
The main advantage of trading using opposite Norsk Hydro and Casio Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Casio Computer 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 Casio Computer will offset losses from the drop in Casio Computer's long position.| Norsk Hydro vs. Perseus Mining Limited | Norsk Hydro vs. Ryanair Holdings plc | Norsk Hydro vs. SEALED AIR | Norsk Hydro vs. Harmony Gold Mining |
| Casio Computer vs. Seven West Media | Casio Computer vs. PARKEN Sport Entertainment | Casio Computer vs. Hollywood Bowl Group | Casio Computer vs. TOWNSQUARE MEDIA INC |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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