Correlation Between Spir Group and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Spir Group 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 Spir Group and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spir Group ASA and Norsk Hydro ASA, you can compare the effects of market volatilities on Spir Group 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 Spir Group with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spir Group and Norsk Hydro.
Diversification Opportunities for Spir Group and Norsk Hydro
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Spir and Norsk is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Spir Group ASA 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 Spir Group 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 Spir Group ASA 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 Spir Group i.e., Spir Group and Norsk Hydro go up and down completely randomly.
Pair Corralation between Spir Group and Norsk Hydro
Assuming the 90 days trading horizon Spir Group ASA is expected to under-perform the Norsk Hydro. In addition to that, Spir Group is 1.76 times more volatile than Norsk Hydro ASA. It trades about 0.0 of its total potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.45 per unit of volatility. If you would invest 6,234 in Norsk Hydro ASA on October 20, 2024 and sell it today you would earn a total of 636.00 from holding Norsk Hydro ASA or generate 10.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spir Group ASA vs. Norsk Hydro ASA
Performance |
| Timeline |
| Spir Group ASA |
| Norsk Hydro ASA |
Spir Group and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spir Group and Norsk Hydro
The main advantage of trading using opposite Spir Group and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spir Group 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.| Spir Group vs. Equinor ASA | Spir Group vs. DnB ASA | Spir Group vs. Aker BP ASA | Spir Group vs. Telenor ASA |
| Norsk Hydro vs. Storebrand ASA | Norsk Hydro vs. Yara International ASA | Norsk Hydro vs. Lery Seafood Group | Norsk Hydro vs. DnB ASA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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