Correlation Between Norsk Hydro and CSSC Offshore
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and CSSC Offshore 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 CSSC Offshore 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 CSSC Offshore Marine, you can compare the effects of market volatilities on Norsk Hydro and CSSC Offshore 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 CSSC Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and CSSC Offshore.
Diversification Opportunities for Norsk Hydro and CSSC Offshore
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Norsk and CSSC is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and CSSC Offshore Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSSC Offshore Marine 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 CSSC Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSSC Offshore Marine has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and CSSC Offshore go up and down completely randomly.
Pair Corralation between Norsk Hydro and CSSC Offshore
Assuming the 90 days trading horizon Norsk Hydro is expected to generate 1.45 times less return on investment than CSSC Offshore. In addition to that, Norsk Hydro is 1.02 times more volatile than CSSC Offshore Marine. It trades about 0.01 of its total potential returns per unit of risk. CSSC Offshore Marine is currently generating about 0.02 per unit of volatility. If you would invest 120.00 in CSSC Offshore Marine on September 2, 2024 and sell it today you would earn a total of 4.00 from holding CSSC Offshore Marine or generate 3.33% 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. CSSC Offshore Marine
Performance |
| Timeline |
| Norsk Hydro ASA |
| CSSC Offshore Marine |
Norsk Hydro and CSSC Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and CSSC Offshore
The main advantage of trading using opposite Norsk Hydro and CSSC Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, CSSC Offshore 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 CSSC Offshore will offset losses from the drop in CSSC Offshore's long position.| Norsk Hydro vs. MTI WIRELESS EDGE | Norsk Hydro vs. Pick n Pay | Norsk Hydro vs. Autohome ADR | Norsk Hydro vs. Aedas Homes SA |
| CSSC Offshore vs. Rogers Communications | CSSC Offshore vs. Computer And Technologies | CSSC Offshore vs. T MOBILE US | CSSC Offshore vs. Micron Technology |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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