Correlation Between Norsk Hydro and JJ SNACK
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and JJ SNACK 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 JJ SNACK 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 JJ SNACK FOODS, you can compare the effects of market volatilities on Norsk Hydro and JJ SNACK 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 JJ SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and JJ SNACK.
Diversification Opportunities for Norsk Hydro and JJ SNACK
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and JJ1 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS 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 JJ SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and JJ SNACK go up and down completely randomly.
Pair Corralation between Norsk Hydro and JJ SNACK
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.91 times more return on investment than JJ SNACK. However, Norsk Hydro ASA is 1.1 times less risky than JJ SNACK. It trades about 0.07 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about -0.13 per unit of risk. If you would invest 548.00 in Norsk Hydro ASA on December 11, 2024 and sell it today you would earn a total of 30.00 from holding Norsk Hydro ASA or generate 5.47% 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. JJ SNACK FOODS
Performance |
| Timeline |
| Norsk Hydro ASA |
| JJ SNACK FOODS |
Norsk Hydro and JJ SNACK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and JJ SNACK
The main advantage of trading using opposite Norsk Hydro and JJ SNACK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, JJ SNACK 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 JJ SNACK will offset losses from the drop in JJ SNACK's long position.| Norsk Hydro vs. TOREX SEMICONDUCTOR LTD | Norsk Hydro vs. QLEANAIR AB SK 50 | Norsk Hydro vs. Hua Hong Semiconductor | Norsk Hydro vs. MYFAIR GOLD P |
| JJ SNACK vs. GOME Retail Holdings | JJ SNACK vs. Globe Trade Centre | JJ SNACK vs. CosmoSteel Holdings Limited | JJ SNACK vs. Indutrade AB |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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