Correlation Between Norsk Hydro and Lery Seafood
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Lery Seafood 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 Lery Seafood 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 Lery Seafood Group, you can compare the effects of market volatilities on Norsk Hydro and Lery Seafood 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 Lery Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Lery Seafood.
Diversification Opportunities for Norsk Hydro and Lery Seafood
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Norsk and Lery is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group 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 Lery Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Lery Seafood go up and down completely randomly.
Pair Corralation between Norsk Hydro and Lery Seafood
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.43 times more return on investment than Lery Seafood. However, Norsk Hydro is 1.43 times more volatile than Lery Seafood Group. It trades about 0.06 of its potential returns per unit of risk. Lery Seafood Group is currently generating about 0.02 per unit of risk. If you would invest 515.00 in Norsk Hydro ASA on October 20, 2024 and sell it today you would earn a total of 73.00 from holding Norsk Hydro ASA or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Lery Seafood Group
Performance |
| Timeline |
| Norsk Hydro ASA |
| Lery Seafood Group |
Norsk Hydro and Lery Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Lery Seafood
The main advantage of trading using opposite Norsk Hydro and Lery Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Lery Seafood 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 Lery Seafood will offset losses from the drop in Lery Seafood's long position.| Norsk Hydro vs. GREENX METALS LTD | Norsk Hydro vs. Burlington Stores | Norsk Hydro vs. AEON STORES | Norsk Hydro vs. COSTCO WHOLESALE CDR |
| Lery Seafood vs. Mowi ASA | Lery Seafood vs. LEROY SEAFOOD GRUNSPADR | Lery Seafood vs. Yihai International Holding | Lery Seafood vs. Lery Seafood Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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