Correlation Between SHIMANO INC and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both SHIMANO INC 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 SHIMANO INC and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHIMANO INC UNSPADR10 and Norsk Hydro ASA, you can compare the effects of market volatilities on SHIMANO INC 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 SHIMANO INC with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHIMANO INC and Norsk Hydro.
Diversification Opportunities for SHIMANO INC and Norsk Hydro
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SHIMANO and Norsk is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SHIMANO INC UNSPADR10 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 SHIMANO INC 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 SHIMANO INC UNSPADR10 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 SHIMANO INC i.e., SHIMANO INC and Norsk Hydro go up and down completely randomly.
Pair Corralation between SHIMANO INC and Norsk Hydro
Assuming the 90 days trading horizon SHIMANO INC UNSPADR10 is expected to under-perform the Norsk Hydro. But the stock apears to be less risky and, when comparing its historical volatility, SHIMANO INC UNSPADR10 is 1.09 times less risky than Norsk Hydro. The stock trades about -0.08 of its potential returns per unit of risk. The Norsk Hydro ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 580.00 in Norsk Hydro ASA on September 3, 2024 and sell it today you would earn a total of 7.00 from holding Norsk Hydro ASA or generate 1.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHIMANO INC UNSPADR10 vs. Norsk Hydro ASA
Performance |
| Timeline |
| SHIMANO INC UNSPADR10 |
| Norsk Hydro ASA |
SHIMANO INC and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHIMANO INC and Norsk Hydro
The main advantage of trading using opposite SHIMANO INC and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHIMANO INC 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.| SHIMANO INC vs. COFCO Joycome Foods | SHIMANO INC vs. SBM OFFSHORE | SHIMANO INC vs. PREMIER FOODS | SHIMANO INC vs. Cal Maine Foods |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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