Correlation Between Norsk Hydro and CryoLife
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and CryoLife 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 CryoLife 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 CryoLife, you can compare the effects of market volatilities on Norsk Hydro and CryoLife 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 CryoLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and CryoLife.
Diversification Opportunities for Norsk Hydro and CryoLife
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and CryoLife is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and CryoLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CryoLife 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 CryoLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CryoLife has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and CryoLife go up and down completely randomly.
Pair Corralation between Norsk Hydro and CryoLife
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.25 times more return on investment than CryoLife. However, Norsk Hydro is 1.25 times more volatile than CryoLife. It trades about -0.01 of its potential returns per unit of risk. CryoLife is currently generating about -0.69 per unit of risk. If you would invest 583.00 in Norsk Hydro ASA on December 10, 2024 and sell it today you would lose (5.00) from holding Norsk Hydro ASA or give up 0.86% 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. CryoLife
Performance |
| Timeline |
| Norsk Hydro ASA |
| CryoLife |
Norsk Hydro and CryoLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and CryoLife
The main advantage of trading using opposite Norsk Hydro and CryoLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, CryoLife 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 CryoLife will offset losses from the drop in CryoLife's long position.| Norsk Hydro vs. TOREX SEMICONDUCTOR LTD | Norsk Hydro vs. QLEANAIR AB SK 50 | Norsk Hydro vs. Hua Hong Semiconductor | Norsk Hydro vs. MYFAIR GOLD P |
| CryoLife vs. RETAIL FOOD GROUP | CryoLife vs. Semiconductor Manufacturing International | CryoLife vs. Magnachip Semiconductor | CryoLife vs. Nordic Semiconductor 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 Stocks Directory module to find actively traded stocks across global markets.
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