Correlation Between Next Hydrogen and Nel ASA
Can any of the company-specific risk be diversified away by investing in both Next Hydrogen and Nel ASA 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 Next Hydrogen and Nel ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Hydrogen Solutions and Nel ASA, you can compare the effects of market volatilities on Next Hydrogen and Nel ASA 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 Next Hydrogen with a short position of Nel ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Hydrogen and Nel ASA.
Diversification Opportunities for Next Hydrogen and Nel ASA
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Next and Nel is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Next Hydrogen Solutions and Nel ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nel ASA and Next Hydrogen 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 Next Hydrogen Solutions are associated (or correlated) with Nel ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nel ASA has no effect on the direction of Next Hydrogen i.e., Next Hydrogen and Nel ASA go up and down completely randomly.
Pair Corralation between Next Hydrogen and Nel ASA
Assuming the 90 days horizon Next Hydrogen Solutions is expected to generate 1.58 times more return on investment than Nel ASA. However, Next Hydrogen is 1.58 times more volatile than Nel ASA. It trades about 0.1 of its potential returns per unit of risk. Nel ASA is currently generating about -0.04 per unit of risk. If you would invest 30.00 in Next Hydrogen Solutions on November 27, 2024 and sell it today you would earn a total of 10.00 from holding Next Hydrogen Solutions or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Hydrogen Solutions vs. Nel ASA
Performance |
| Timeline |
| Next Hydrogen Solutions |
| Nel ASA |
Next Hydrogen and Nel ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Hydrogen and Nel ASA
The main advantage of trading using opposite Next Hydrogen and Nel ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Hydrogen position performs unexpectedly, Nel ASA 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 Nel ASA will offset losses from the drop in Nel ASA's long position.| Next Hydrogen vs. Weir Group PLC | Next Hydrogen vs. Greenshift Corp | Next Hydrogen vs. Quality Industrial Corp | Next Hydrogen vs. ITM Power Plc |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |