Correlation Between Quaker Chemical and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical 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 Quaker Chemical and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and Norsk Hydro ASA, you can compare the effects of market volatilities on Quaker Chemical 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 Quaker Chemical with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Norsk Hydro.
Diversification Opportunities for Quaker Chemical and Norsk Hydro
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Quaker and Norsk is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical i.e., Quaker Chemical and Norsk Hydro go up and down completely randomly.
Pair Corralation between Quaker Chemical and Norsk Hydro
Assuming the 90 days horizon Quaker Chemical is expected to under-perform the Norsk Hydro. In addition to that, Quaker Chemical is 1.08 times more volatile than Norsk Hydro ASA. It trades about -0.25 of its total potential returns per unit of risk. Norsk Hydro ASA is currently generating about -0.24 per unit of volatility. If you would invest 606.00 in Norsk Hydro ASA on September 16, 2024 and sell it today you would lose (43.00) from holding Norsk Hydro ASA or give up 7.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. Norsk Hydro ASA
Performance |
| Timeline |
| Quaker Chemical |
| Norsk Hydro ASA |
Quaker Chemical and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and Norsk Hydro
The main advantage of trading using opposite Quaker Chemical and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical 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.| Quaker Chemical vs. Albemarle | Quaker Chemical vs. Superior Plus Corp | Quaker Chemical vs. SIVERS SEMICONDUCTORS AB | Quaker Chemical vs. Norsk Hydro ASA |
| Norsk Hydro vs. AIR PRODCHEMICALS | Norsk Hydro vs. Spirent Communications plc | Norsk Hydro vs. X FAB Silicon Foundries | Norsk Hydro vs. Quaker Chemical |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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