Correlation Between Norsk Hydro and Compagnie Plastic
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Compagnie Plastic 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 Compagnie Plastic 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 Compagnie Plastic Omnium, you can compare the effects of market volatilities on Norsk Hydro and Compagnie Plastic 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 Compagnie Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Compagnie Plastic.
Diversification Opportunities for Norsk Hydro and Compagnie Plastic
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Norsk and Compagnie is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Compagnie Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Plastic Omnium 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 Compagnie Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Plastic Omnium has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Compagnie Plastic go up and down completely randomly.
Pair Corralation between Norsk Hydro and Compagnie Plastic
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.49 times more return on investment than Compagnie Plastic. However, Norsk Hydro is 1.49 times more volatile than Compagnie Plastic Omnium. It trades about 0.03 of its potential returns per unit of risk. Compagnie Plastic Omnium is currently generating about -0.01 per unit of risk. If you would invest 404.00 in Norsk Hydro ASA on September 13, 2024 and sell it today you would earn a total of 168.00 from holding Norsk Hydro ASA or generate 41.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Compagnie Plastic Omnium
Performance |
| Timeline |
| Norsk Hydro ASA |
| Compagnie Plastic Omnium |
Norsk Hydro and Compagnie Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Compagnie Plastic
The main advantage of trading using opposite Norsk Hydro and Compagnie Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Compagnie Plastic 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 Compagnie Plastic will offset losses from the drop in Compagnie Plastic's long position.| Norsk Hydro vs. Goosehead Insurance | Norsk Hydro vs. RETAIL FOOD GROUP | Norsk Hydro vs. COSTCO WHOLESALE CDR | Norsk Hydro vs. SBI Insurance Group |
| Compagnie Plastic vs. Bridgestone | Compagnie Plastic vs. Superior Plus Corp | Compagnie Plastic vs. SIVERS SEMICONDUCTORS AB | Compagnie Plastic 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |