Correlation Between Norsk Hydro and Elmos Semiconductor
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Elmos Semiconductor 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 Elmos Semiconductor 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 Elmos Semiconductor SE, you can compare the effects of market volatilities on Norsk Hydro and Elmos Semiconductor 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 Elmos Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Elmos Semiconductor.
Diversification Opportunities for Norsk Hydro and Elmos Semiconductor
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and Elmos is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Elmos Semiconductor SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elmos Semiconductor 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 Elmos Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elmos Semiconductor has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Elmos Semiconductor go up and down completely randomly.
Pair Corralation between Norsk Hydro and Elmos Semiconductor
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the Elmos Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Norsk Hydro ASA is 2.24 times less risky than Elmos Semiconductor. The stock trades about -0.54 of its potential returns per unit of risk. The Elmos Semiconductor SE is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 6,170 in Elmos Semiconductor SE on September 21, 2024 and sell it today you would earn a total of 560.00 from holding Elmos Semiconductor SE or generate 9.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Elmos Semiconductor SE
Performance |
| Timeline |
| Norsk Hydro ASA |
| Elmos Semiconductor |
Norsk Hydro and Elmos Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Elmos Semiconductor
The main advantage of trading using opposite Norsk Hydro and Elmos Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Elmos Semiconductor 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 Elmos Semiconductor will offset losses from the drop in Elmos Semiconductor'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 |
| Elmos Semiconductor vs. Postal Savings Bank | Elmos Semiconductor vs. Cleanaway Waste Management | Elmos Semiconductor vs. AGF Management Limited | Elmos Semiconductor vs. EAT WELL INVESTMENT |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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