Correlation Between Norsk Hydro and Hochschild Mining
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Hochschild Mining 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 Hochschild Mining 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 Hochschild Mining plc, you can compare the effects of market volatilities on Norsk Hydro and Hochschild Mining 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 Hochschild Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Hochschild Mining.
Diversification Opportunities for Norsk Hydro and Hochschild Mining
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Norsk and Hochschild is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Hochschild Mining plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochschild Mining plc 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 Hochschild Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochschild Mining plc has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Hochschild Mining go up and down completely randomly.
Pair Corralation between Norsk Hydro and Hochschild Mining
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.88 times more return on investment than Hochschild Mining. However, Norsk Hydro ASA is 1.14 times less risky than Hochschild Mining. It trades about 0.03 of its potential returns per unit of risk. Hochschild Mining plc is currently generating about 0.0 per unit of risk. If you would invest 581.00 in Norsk Hydro ASA on September 12, 2024 and sell it today you would earn a total of 7.00 from holding Norsk Hydro ASA or generate 1.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Hochschild Mining plc
Performance |
| Timeline |
| Norsk Hydro ASA |
| Hochschild Mining plc |
Norsk Hydro and Hochschild Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Hochschild Mining
The main advantage of trading using opposite Norsk Hydro and Hochschild Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Hochschild Mining 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 Hochschild Mining will offset losses from the drop in Hochschild Mining'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 |
| Hochschild Mining vs. Franco Nevada | Hochschild Mining vs. Superior Plus Corp | Hochschild Mining vs. SIVERS SEMICONDUCTORS AB | Hochschild Mining 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.
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