Correlation Between Norsk Hydro and SHIMANO INC
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and SHIMANO INC 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 SHIMANO INC 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 SHIMANO INC UNSPADR10, you can compare the effects of market volatilities on Norsk Hydro and SHIMANO INC 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 SHIMANO INC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and SHIMANO INC.
Diversification Opportunities for Norsk Hydro and SHIMANO INC
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Norsk and SHIMANO is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and SHIMANO INC UNSPADR10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHIMANO INC UNSPADR10 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 SHIMANO INC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHIMANO INC UNSPADR10 has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and SHIMANO INC go up and down completely randomly.
Pair Corralation between Norsk Hydro and SHIMANO INC
Assuming the 90 days trading horizon Norsk Hydro is expected to generate 4.28 times less return on investment than SHIMANO INC. But when comparing it to its historical volatility, Norsk Hydro ASA is 1.07 times less risky than SHIMANO INC. It trades about 0.03 of its potential returns per unit of risk. SHIMANO INC UNSPADR10 is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,270 in SHIMANO INC UNSPADR10 on September 12, 2024 and sell it today you would earn a total of 100.00 from holding SHIMANO INC UNSPADR10 or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. SHIMANO INC UNSPADR10
Performance |
| Timeline |
| Norsk Hydro ASA |
| SHIMANO INC UNSPADR10 |
Norsk Hydro and SHIMANO INC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and SHIMANO INC
The main advantage of trading using opposite Norsk Hydro and SHIMANO INC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, SHIMANO INC 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 SHIMANO INC will offset losses from the drop in SHIMANO INC'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 |
| SHIMANO INC vs. Superior Plus Corp | SHIMANO INC vs. SIVERS SEMICONDUCTORS AB | SHIMANO INC vs. Norsk Hydro ASA | SHIMANO INC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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