Correlation Between Norsk Hydro and Toho
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Toho 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 Toho 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 Toho Co, you can compare the effects of market volatilities on Norsk Hydro and Toho 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 Toho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Toho.
Diversification Opportunities for Norsk Hydro and Toho
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and Toho is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Toho Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toho 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 Toho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toho has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Toho go up and down completely randomly.
Pair Corralation between Norsk Hydro and Toho
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to under-perform the Toho. But the stock apears to be less risky and, when comparing its historical volatility, Norsk Hydro ASA is 1.35 times less risky than Toho. The stock trades about -0.59 of its potential returns per unit of risk. The Toho Co is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,660 in Toho Co on September 22, 2024 and sell it today you would earn a total of 380.00 from holding Toho Co or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Toho Co
Performance |
| Timeline |
| Norsk Hydro ASA |
| Toho |
Norsk Hydro and Toho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Toho
The main advantage of trading using opposite Norsk Hydro and Toho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Toho 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 Toho will offset losses from the drop in Toho's long position.| Norsk Hydro vs. Perseus Mining Limited | Norsk Hydro vs. Ryanair Holdings plc | Norsk Hydro vs. SEALED AIR | Norsk Hydro vs. Harmony Gold Mining |
| Toho vs. Live Nation Entertainment | Toho vs. Dolby Laboratories | Toho vs. CTS Eventim AG | Toho vs. Fuji Media Holdings |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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