Correlation Between OPEN HOUSE and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both OPEN HOUSE and Norsk Hydro 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 OPEN HOUSE and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OPEN HOUSE GROUP and Norsk Hydro ASA, you can compare the effects of market volatilities on OPEN HOUSE and Norsk Hydro 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 OPEN HOUSE with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPEN HOUSE and Norsk Hydro.
Diversification Opportunities for OPEN HOUSE and Norsk Hydro
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between OPEN and Norsk is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding OPEN HOUSE GROUP and Norsk Hydro ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsk Hydro ASA and OPEN HOUSE 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 OPEN HOUSE GROUP are associated (or correlated) with Norsk Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsk Hydro ASA has no effect on the direction of OPEN HOUSE i.e., OPEN HOUSE and Norsk Hydro go up and down completely randomly.
Pair Corralation between OPEN HOUSE and Norsk Hydro
Assuming the 90 days horizon OPEN HOUSE is expected to generate 3.94 times less return on investment than Norsk Hydro. But when comparing it to its historical volatility, OPEN HOUSE GROUP is 2.44 times less risky than Norsk Hydro. It trades about 0.05 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 346.00 in Norsk Hydro ASA on September 3, 2024 and sell it today you would earn a total of 241.00 from holding Norsk Hydro ASA or generate 69.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
OPEN HOUSE GROUP vs. Norsk Hydro ASA
Performance |
| Timeline |
| OPEN HOUSE GROUP |
| Norsk Hydro ASA |
OPEN HOUSE and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OPEN HOUSE and Norsk Hydro
The main advantage of trading using opposite OPEN HOUSE and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPEN HOUSE position performs unexpectedly, Norsk Hydro 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 Norsk Hydro will offset losses from the drop in Norsk Hydro's long position.| OPEN HOUSE vs. ADRIATIC METALS LS 013355 | OPEN HOUSE vs. MAVEN WIRELESS SWEDEN | OPEN HOUSE vs. Chunghwa Telecom Co | OPEN HOUSE vs. Gamma Communications plc |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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