Correlation Between Norsk Hydro and Hisense Home
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Hisense Home 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 Hisense Home 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 Hisense Home Appliances, you can compare the effects of market volatilities on Norsk Hydro and Hisense Home 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 Hisense Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Hisense Home.
Diversification Opportunities for Norsk Hydro and Hisense Home
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and Hisense is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Hisense Home Appliances in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hisense Home Appliances 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 Hisense Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hisense Home Appliances has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Hisense Home go up and down completely randomly.
Pair Corralation between Norsk Hydro and Hisense Home
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.79 times more return on investment than Hisense Home. However, Norsk Hydro ASA is 1.26 times less risky than Hisense Home. It trades about 0.18 of its potential returns per unit of risk. Hisense Home Appliances is currently generating about -0.17 per unit of risk. If you would invest 560.00 in Norsk Hydro ASA on December 6, 2024 and sell it today you would earn a total of 46.00 from holding Norsk Hydro ASA or generate 8.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Hisense Home Appliances
Performance |
| Timeline |
| Norsk Hydro ASA |
| Hisense Home Appliances |
Norsk Hydro and Hisense Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Hisense Home
The main advantage of trading using opposite Norsk Hydro and Hisense Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Hisense Home 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 Hisense Home will offset losses from the drop in Hisense Home's long position.| Norsk Hydro vs. SBI Insurance Group | Norsk Hydro vs. Sabre Insurance Group | Norsk Hydro vs. Singapore Airlines Limited | Norsk Hydro vs. Selective Insurance Group |
| Hisense Home vs. ZURICH INSURANCE GROUP | Hisense Home vs. MPH Health Care | Hisense Home vs. Cardinal Health | Hisense Home vs. WESANA HEALTH HOLD |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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