Correlation Between Norsk Hydro and BII Railway
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and BII Railway 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 BII Railway 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 BII Railway Transportation, you can compare the effects of market volatilities on Norsk Hydro and BII Railway 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 BII Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and BII Railway.
Diversification Opportunities for Norsk Hydro and BII Railway
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norsk and BII is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and BII Railway Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BII Railway Transpor 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 BII Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BII Railway Transpor has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and BII Railway go up and down completely randomly.
Pair Corralation between Norsk Hydro and BII Railway
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.99 times more return on investment than BII Railway. However, Norsk Hydro ASA is 1.01 times less risky than BII Railway. It trades about 0.04 of its potential returns per unit of risk. BII Railway Transportation is currently generating about 0.01 per unit of risk. If you would invest 401.00 in Norsk Hydro ASA on September 12, 2024 and sell it today you would earn a total of 187.00 from holding Norsk Hydro ASA or generate 46.63% 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. BII Railway Transportation
Performance |
| Timeline |
| Norsk Hydro ASA |
| BII Railway Transpor |
Norsk Hydro and BII Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and BII Railway
The main advantage of trading using opposite Norsk Hydro and BII Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, BII Railway 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 BII Railway will offset losses from the drop in BII Railway'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 |
| BII Railway vs. Cognizant Technology Solutions | BII Railway vs. Superior Plus Corp | BII Railway vs. SIVERS SEMICONDUCTORS AB | BII Railway 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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