Correlation Between Norsk Hydro and ENEOS Holdings
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and ENEOS Holdings 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 ENEOS Holdings 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 ENEOS Holdings, you can compare the effects of market volatilities on Norsk Hydro and ENEOS Holdings 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 ENEOS Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and ENEOS Holdings.
Diversification Opportunities for Norsk Hydro and ENEOS Holdings
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Norsk and ENEOS is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and ENEOS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENEOS Holdings 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 ENEOS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENEOS Holdings has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and ENEOS Holdings go up and down completely randomly.
Pair Corralation between Norsk Hydro and ENEOS Holdings
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.44 times more return on investment than ENEOS Holdings. However, Norsk Hydro is 1.44 times more volatile than ENEOS Holdings. It trades about 0.04 of its potential returns per unit of risk. ENEOS Holdings is currently generating about 0.05 per unit of risk. If you would invest 401.00 in Norsk Hydro ASA on September 12, 2024 and sell it today you would earn a total of 187.00 from holding Norsk Hydro ASA or generate 46.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. ENEOS Holdings
Performance |
| Timeline |
| Norsk Hydro ASA |
| ENEOS Holdings |
Norsk Hydro and ENEOS Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and ENEOS Holdings
The main advantage of trading using opposite Norsk Hydro and ENEOS Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, ENEOS Holdings 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 ENEOS Holdings will offset losses from the drop in ENEOS Holdings' long position.| Norsk Hydro vs. Aluminum of | Norsk Hydro vs. Kaiser Aluminum | Norsk Hydro vs. Superior Plus Corp | Norsk Hydro vs. SIVERS SEMICONDUCTORS AB |
| ENEOS Holdings vs. Superior Plus Corp | ENEOS Holdings vs. SIVERS SEMICONDUCTORS AB | ENEOS Holdings vs. Norsk Hydro ASA | ENEOS Holdings vs. Reliance Steel Aluminum |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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