Correlation Between Norsk Hydro and YASKAWA ELEC
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and YASKAWA ELEC 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 YASKAWA ELEC 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 YASKAWA ELEC UNSP, you can compare the effects of market volatilities on Norsk Hydro and YASKAWA ELEC 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 YASKAWA ELEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and YASKAWA ELEC.
Diversification Opportunities for Norsk Hydro and YASKAWA ELEC
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and YASKAWA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and YASKAWA ELEC UNSP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YASKAWA ELEC UNSP 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 YASKAWA ELEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YASKAWA ELEC UNSP has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and YASKAWA ELEC go up and down completely randomly.
Pair Corralation between Norsk Hydro and YASKAWA ELEC
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.42 times more return on investment than YASKAWA ELEC. However, Norsk Hydro is 1.42 times more volatile than YASKAWA ELEC UNSP. It trades about 0.03 of its potential returns per unit of risk. YASKAWA ELEC UNSP is currently generating about 0.0 per unit of risk. If you would invest 404.00 in Norsk Hydro ASA on September 13, 2024 and sell it today you would earn a total of 168.00 from holding Norsk Hydro ASA or generate 41.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Norsk Hydro ASA vs. YASKAWA ELEC UNSP
Performance |
| Timeline |
| Norsk Hydro ASA |
| YASKAWA ELEC UNSP |
Norsk Hydro and YASKAWA ELEC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and YASKAWA ELEC
The main advantage of trading using opposite Norsk Hydro and YASKAWA ELEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, YASKAWA ELEC 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 YASKAWA ELEC will offset losses from the drop in YASKAWA ELEC's long position.| Norsk Hydro vs. Goosehead Insurance | Norsk Hydro vs. RETAIL FOOD GROUP | Norsk Hydro vs. COSTCO WHOLESALE CDR | Norsk Hydro vs. SBI Insurance Group |
| YASKAWA ELEC vs. Superior Plus Corp | YASKAWA ELEC vs. SIVERS SEMICONDUCTORS AB | YASKAWA ELEC vs. Norsk Hydro ASA | YASKAWA ELEC 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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