Correlation Between Norsk Hydro and S A P
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and S A P 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 S A P 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 SAP SE, you can compare the effects of market volatilities on Norsk Hydro and S A P 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 S A P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and S A P.
Diversification Opportunities for Norsk Hydro and S A P
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Norsk and SAP is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and SAP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAP SE 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 S A P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAP SE has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and S A P go up and down completely randomly.
Pair Corralation between Norsk Hydro and S A P
Assuming the 90 days trading horizon Norsk Hydro is expected to generate 2.35 times less return on investment than S A P. In addition to that, Norsk Hydro is 2.07 times more volatile than SAP SE. It trades about 0.06 of its total potential returns per unit of risk. SAP SE is currently generating about 0.31 per unit of volatility. If you would invest 22,105 in SAP SE on September 15, 2024 and sell it today you would earn a total of 2,000 from holding SAP SE or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. SAP SE
Performance |
| Timeline |
| Norsk Hydro ASA |
| SAP SE |
Norsk Hydro and S A P Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and S A P
The main advantage of trading using opposite Norsk Hydro and S A P positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, S A P 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 S A P will offset losses from the drop in S A P's long position.| Norsk Hydro vs. GALENA MINING LTD | Norsk Hydro vs. Cogent Communications Holdings | Norsk Hydro vs. GREENX METALS LTD | Norsk Hydro vs. T MOBILE US |
| S A P vs. Superior Plus Corp | S A P vs. SIVERS SEMICONDUCTORS AB | S A P vs. Norsk Hydro ASA | S A P 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |