Correlation Between Norsk Hydro and Computer
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and 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 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 Computer And Technologies, you can compare the effects of market volatilities on Norsk Hydro and 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 Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Computer.
Diversification Opportunities for Norsk Hydro and Computer
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and Computer is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Computer And Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer And Technologies 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 Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer And Technologies has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Computer go up and down completely randomly.
Pair Corralation between Norsk Hydro and Computer
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.19 times more return on investment than Computer. However, Norsk Hydro is 1.19 times more volatile than Computer And Technologies. It trades about 0.06 of its potential returns per unit of risk. Computer And Technologies is currently generating about 0.04 per unit of risk. If you would invest 349.00 in Norsk Hydro ASA on September 12, 2024 and sell it today you would earn a total of 239.00 from holding Norsk Hydro ASA or generate 68.48% 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. Computer And Technologies
Performance |
| Timeline |
| Norsk Hydro ASA |
| Computer And Technologies |
Norsk Hydro and Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Computer
The main advantage of trading using opposite Norsk Hydro and Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, 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 Computer will offset losses from the drop in Computer'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 |
| Computer vs. Cognizant Technology Solutions | Computer vs. Superior Plus Corp | Computer vs. SIVERS SEMICONDUCTORS AB | Computer 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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