Correlation Between Norsk Hydro and Resmed
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Resmed 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 Resmed 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 Resmed Inc DRC, you can compare the effects of market volatilities on Norsk Hydro and Resmed 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 Resmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Resmed.
Diversification Opportunities for Norsk Hydro and Resmed
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Norsk and Resmed is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Resmed Inc DRC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Resmed Inc DRC 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 Resmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Resmed Inc DRC has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Resmed go up and down completely randomly.
Pair Corralation between Norsk Hydro and Resmed
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.47 times more return on investment than Resmed. However, Norsk Hydro is 1.47 times more volatile than Resmed Inc DRC. It trades about 0.23 of its potential returns per unit of risk. Resmed Inc DRC is currently generating about 0.23 per unit of risk. If you would invest 527.00 in Norsk Hydro ASA on October 27, 2024 and sell it today you would earn a total of 47.00 from holding Norsk Hydro ASA or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Resmed Inc DRC
Performance |
| Timeline |
| Norsk Hydro ASA |
| Resmed Inc DRC |
Norsk Hydro and Resmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Resmed
The main advantage of trading using opposite Norsk Hydro and Resmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Resmed 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 Resmed will offset losses from the drop in Resmed's long position.| Norsk Hydro vs. Lifeway Foods | Norsk Hydro vs. SINGAPORE AIRLINES | Norsk Hydro vs. Nomad Foods | Norsk Hydro vs. SOUTHWEST AIRLINES |
| Resmed vs. Perseus Mining Limited | Resmed vs. De Grey Mining | Resmed vs. Calibre Mining Corp | Resmed vs. MCEWEN MINING INC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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