Correlation Between Norsk Hydro and Esso (Thailand)
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Esso (Thailand) 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 Esso (Thailand) 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 Esso Public, you can compare the effects of market volatilities on Norsk Hydro and Esso (Thailand) 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 Esso (Thailand). Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Esso (Thailand).
Diversification Opportunities for Norsk Hydro and Esso (Thailand)
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and Esso is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Esso Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esso (Thailand) 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 Esso (Thailand). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esso (Thailand) has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Esso (Thailand) go up and down completely randomly.
Pair Corralation between Norsk Hydro and Esso (Thailand)
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the Esso (Thailand). But the stock apears to be less risky and, when comparing its historical volatility, Norsk Hydro ASA is 1.98 times less risky than Esso (Thailand). The stock trades about -0.47 of its potential returns per unit of risk. The Esso Public is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 20.00 in Esso Public on October 1, 2024 and sell it today you would earn a total of 0.00 from holding Esso Public or generate 0.0% 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. Esso Public
Performance |
| Timeline |
| Norsk Hydro ASA |
| Esso (Thailand) |
Norsk Hydro and Esso (Thailand) Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Esso (Thailand)
The main advantage of trading using opposite Norsk Hydro and Esso (Thailand) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Esso (Thailand) 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 Esso (Thailand) will offset losses from the drop in Esso (Thailand)'s long position.| Norsk Hydro vs. Summit Materials | Norsk Hydro vs. Compagnie Plastic Omnium | Norsk Hydro vs. TOREX SEMICONDUCTOR LTD | Norsk Hydro vs. EAGLE MATERIALS |
| Esso (Thailand) vs. Reliance Industries Limited | Esso (Thailand) vs. Marathon Petroleum Corp | Esso (Thailand) vs. NESTE OYJ UNSPADR | Esso (Thailand) vs. Polski Koncern Naftowy |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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