Correlation Between Norsk Hydro and PSI Software
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By analyzing existing cross correlation between Norsk Hydro ASA and PSI Software AG, you can compare the effects of market volatilities on Norsk Hydro and PSI Software 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 PSI Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and PSI Software.
Diversification Opportunities for Norsk Hydro and PSI Software
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and PSI is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and PSI Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSI Software AG 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 PSI Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSI Software AG has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and PSI Software go up and down completely randomly.
Pair Corralation between Norsk Hydro and PSI Software
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 2.2 times more return on investment than PSI Software. However, Norsk Hydro is 2.2 times more volatile than PSI Software AG. It trades about 0.05 of its potential returns per unit of risk. PSI Software AG is currently generating about -0.1 per unit of risk. If you would invest 552.00 in Norsk Hydro ASA on September 13, 2024 and sell it today you would earn a total of 14.00 from holding Norsk Hydro ASA or generate 2.54% 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. PSI Software AG
Performance |
| Timeline |
| Norsk Hydro ASA |
| PSI Software AG |
Norsk Hydro and PSI Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and PSI Software
The main advantage of trading using opposite Norsk Hydro and PSI Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, PSI Software 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 PSI Software will offset losses from the drop in PSI Software's long position.| Norsk Hydro vs. Taylor Morrison Home | Norsk Hydro vs. American Homes 4 | Norsk Hydro vs. Haverty Furniture Companies | Norsk Hydro vs. Autohome ADR |
| PSI Software vs. DiamondRock Hospitality | PSI Software vs. SIEM OFFSHORE NEW | PSI Software vs. Digilife Technologies Limited | PSI Software vs. CSSC Offshore Marine |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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