Correlation Between Norsk Hydro and AMAG Austria
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and AMAG Austria 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 AMAG Austria 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 AMAG Austria Metall, you can compare the effects of market volatilities on Norsk Hydro and AMAG Austria 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 AMAG Austria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and AMAG Austria.
Diversification Opportunities for Norsk Hydro and AMAG Austria
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Norsk and AMAG is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and AMAG Austria Metall in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAG Austria Metall 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 AMAG Austria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAG Austria Metall has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and AMAG Austria go up and down completely randomly.
Pair Corralation between Norsk Hydro and AMAG Austria
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.91 times more return on investment than AMAG Austria. However, Norsk Hydro is 1.91 times more volatile than AMAG Austria Metall. It trades about 0.24 of its potential returns per unit of risk. AMAG Austria Metall is currently generating about 0.01 per unit of risk. If you would invest 515.00 in Norsk Hydro ASA on October 29, 2024 and sell it today you would earn a total of 60.00 from holding Norsk Hydro ASA or generate 11.65% 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. AMAG Austria Metall
Performance |
| Timeline |
| Norsk Hydro ASA |
| AMAG Austria Metall |
Norsk Hydro and AMAG Austria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and AMAG Austria
The main advantage of trading using opposite Norsk Hydro and AMAG Austria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, AMAG Austria 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 AMAG Austria will offset losses from the drop in AMAG Austria's long position.| Norsk Hydro vs. Norsk Hydro ASA | Norsk Hydro vs. Aluminum of | Norsk Hydro vs. Alcoa Corp | Norsk Hydro vs. Kaiser Aluminum |
| AMAG Austria vs. Aya Gold Silver | AMAG Austria vs. MAGNUM MINING EXP | AMAG Austria vs. Carsales | AMAG Austria vs. BOS BETTER ONLINE |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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