Correlation Between Norsk Hydro and Hon Hai
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Hon Hai 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 Hon Hai 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 Hon Hai Precision, you can compare the effects of market volatilities on Norsk Hydro and Hon Hai 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 Hon Hai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Hon Hai.
Diversification Opportunities for Norsk Hydro and Hon Hai
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norsk and Hon is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Hon Hai Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hon Hai Precision 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 Hon Hai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hon Hai Precision has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Hon Hai go up and down completely randomly.
Pair Corralation between Norsk Hydro and Hon Hai
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.65 times more return on investment than Hon Hai. However, Norsk Hydro ASA is 1.53 times less risky than Hon Hai. It trades about 0.04 of its potential returns per unit of risk. Hon Hai Precision is currently generating about 0.01 per unit of risk. If you would invest 506.00 in Norsk Hydro ASA on September 21, 2024 and sell it today you would earn a total of 35.00 from holding Norsk Hydro ASA or generate 6.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.08% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Hon Hai Precision
Performance |
| Timeline |
| Norsk Hydro ASA |
| Hon Hai Precision |
Norsk Hydro and Hon Hai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Hon Hai
The main advantage of trading using opposite Norsk Hydro and Hon Hai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Hon Hai 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 Hon Hai will offset losses from the drop in Hon Hai'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 |
| Hon Hai vs. Sunny Optical Technology | Hon Hai vs. Superior Plus Corp | Hon Hai vs. SIVERS SEMICONDUCTORS AB | Hon Hai 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |