Correlation Between Sandfire Resources and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Sandfire Resources 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 Sandfire Resources and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sandfire Resources Limited and Norsk Hydro ASA, you can compare the effects of market volatilities on Sandfire Resources 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 Sandfire Resources with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sandfire Resources and Norsk Hydro.
Diversification Opportunities for Sandfire Resources and Norsk Hydro
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sandfire and Norsk is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Sandfire Resources Limited 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 Sandfire Resources 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 Sandfire Resources Limited 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 Sandfire Resources i.e., Sandfire Resources and Norsk Hydro go up and down completely randomly.
Pair Corralation between Sandfire Resources and Norsk Hydro
Assuming the 90 days horizon Sandfire Resources Limited is expected to generate 0.69 times more return on investment than Norsk Hydro. However, Sandfire Resources Limited is 1.45 times less risky than Norsk Hydro. It trades about 0.06 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.03 per unit of risk. If you would invest 337.00 in Sandfire Resources Limited on September 13, 2024 and sell it today you would earn a total of 308.00 from holding Sandfire Resources Limited or generate 91.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sandfire Resources Limited vs. Norsk Hydro ASA
Performance |
| Timeline |
| Sandfire Resources |
| Norsk Hydro ASA |
Sandfire Resources and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sandfire Resources and Norsk Hydro
The main advantage of trading using opposite Sandfire Resources and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sandfire Resources 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.| Sandfire Resources vs. Tsingtao Brewery | Sandfire Resources vs. Sixt Leasing SE | Sandfire Resources vs. LANDSEA HOMES P | Sandfire Resources vs. Lendlease Group |
| Norsk Hydro vs. Goosehead Insurance | Norsk Hydro vs. RETAIL FOOD GROUP | Norsk Hydro vs. COSTCO WHOLESALE CDR | Norsk Hydro vs. SBI Insurance Group |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |