Correlation Between Norsk Hydro and NEO PERFORMMAT
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and NEO PERFORMMAT 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 NEO PERFORMMAT 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 NEO PERFORMMAT, you can compare the effects of market volatilities on Norsk Hydro and NEO PERFORMMAT 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 NEO PERFORMMAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and NEO PERFORMMAT.
Diversification Opportunities for Norsk Hydro and NEO PERFORMMAT
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and NEO is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and NEO PERFORMMAT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEO PERFORMMAT 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 NEO PERFORMMAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEO PERFORMMAT has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and NEO PERFORMMAT go up and down completely randomly.
Pair Corralation between Norsk Hydro and NEO PERFORMMAT
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.92 times more return on investment than NEO PERFORMMAT. However, Norsk Hydro ASA is 1.09 times less risky than NEO PERFORMMAT. It trades about 0.04 of its potential returns per unit of risk. NEO PERFORMMAT is currently generating about 0.02 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. NEO PERFORMMAT
Performance |
| Timeline |
| Norsk Hydro ASA |
| NEO PERFORMMAT |
Norsk Hydro and NEO PERFORMMAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and NEO PERFORMMAT
The main advantage of trading using opposite Norsk Hydro and NEO PERFORMMAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, NEO PERFORMMAT 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 NEO PERFORMMAT will offset losses from the drop in NEO PERFORMMAT'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 |
| NEO PERFORMMAT vs. Albemarle | NEO PERFORMMAT vs. Superior Plus Corp | NEO PERFORMMAT vs. SIVERS SEMICONDUCTORS AB | NEO PERFORMMAT 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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