Correlation Between Norsk Hydro and CREMECOMTRSBI
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and CREMECOMTRSBI 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 CREMECOMTRSBI 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 CREMECOMTRSBI DL 001, you can compare the effects of market volatilities on Norsk Hydro and CREMECOMTRSBI 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 CREMECOMTRSBI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and CREMECOMTRSBI.
Diversification Opportunities for Norsk Hydro and CREMECOMTRSBI
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Norsk and CREMECOMTRSBI is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and CREMECOMTRSBI DL 001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CREMECOMTRSBI DL 001 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 CREMECOMTRSBI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CREMECOMTRSBI DL 001 has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and CREMECOMTRSBI go up and down completely randomly.
Pair Corralation between Norsk Hydro and CREMECOMTRSBI
Assuming the 90 days trading horizon Norsk Hydro is expected to generate 162.33 times less return on investment than CREMECOMTRSBI. But when comparing it to its historical volatility, Norsk Hydro ASA is 31.91 times less risky than CREMECOMTRSBI. It trades about 0.03 of its potential returns per unit of risk. CREMECOMTRSBI DL 001 is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 34.00 in CREMECOMTRSBI DL 001 on September 12, 2024 and sell it today you would lose (14.00) from holding CREMECOMTRSBI DL 001 or give up 41.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. CREMECOMTRSBI DL 001
Performance |
| Timeline |
| Norsk Hydro ASA |
| CREMECOMTRSBI DL 001 |
Norsk Hydro and CREMECOMTRSBI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and CREMECOMTRSBI
The main advantage of trading using opposite Norsk Hydro and CREMECOMTRSBI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, CREMECOMTRSBI 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 CREMECOMTRSBI will offset losses from the drop in CREMECOMTRSBI'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 |
| CREMECOMTRSBI vs. Office Properties Income | CREMECOMTRSBI vs. CITY OFFICE REIT | CREMECOMTRSBI vs. Superior Plus Corp | CREMECOMTRSBI vs. SIVERS SEMICONDUCTORS AB |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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