Correlation Between Norsk Hydro and Talanx AG
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Talanx AG 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 Talanx AG 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 Talanx AG, you can compare the effects of market volatilities on Norsk Hydro and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Talanx AG.
Diversification Opportunities for Norsk Hydro and Talanx AG
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and Talanx is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Talanx AG go up and down completely randomly.
Pair Corralation between Norsk Hydro and Talanx AG
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 2.5 times more return on investment than Talanx AG. However, Norsk Hydro is 2.5 times more volatile than Talanx AG. It trades about 0.12 of its potential returns per unit of risk. Talanx AG is currently generating about 0.23 per unit of risk. If you would invest 573.00 in Norsk Hydro ASA on August 24, 2024 and sell it today you would earn a total of 46.00 from holding Norsk Hydro ASA or generate 8.03% 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. Talanx AG
Performance |
| Timeline |
| Norsk Hydro ASA |
| Talanx AG |
Norsk Hydro and Talanx AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Talanx AG
The main advantage of trading using opposite Norsk Hydro and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG's long position.| Norsk Hydro vs. HEALTHCARE REAL A | Norsk Hydro vs. CVS Health | Norsk Hydro vs. Insteel Industries | Norsk Hydro vs. ZANAGA IRON ORE |
| Talanx AG vs. PROSIEBENSAT1 MEDIADR4 | Talanx AG vs. PLAYSTUDIOS A DL 0001 | Talanx AG vs. SMA Solar Technology | Talanx AG vs. AECOM TECHNOLOGY |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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