Correlation Between THAI BEVERAGE and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both THAI BEVERAGE 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 THAI BEVERAGE and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THAI BEVERAGE and Norsk Hydro ASA, you can compare the effects of market volatilities on THAI BEVERAGE 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 THAI BEVERAGE with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of THAI BEVERAGE and Norsk Hydro.
Diversification Opportunities for THAI BEVERAGE and Norsk Hydro
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between THAI and Norsk is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding THAI BEVERAGE 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 THAI BEVERAGE 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 THAI BEVERAGE 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 THAI BEVERAGE i.e., THAI BEVERAGE and Norsk Hydro go up and down completely randomly.
Pair Corralation between THAI BEVERAGE and Norsk Hydro
Assuming the 90 days trading horizon THAI BEVERAGE is expected to generate 1.78 times more return on investment than Norsk Hydro. However, THAI BEVERAGE is 1.78 times more volatile than Norsk Hydro ASA. It trades about 0.06 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about -0.26 per unit of risk. If you would invest 36.00 in THAI BEVERAGE on September 19, 2024 and sell it today you would earn a total of 1.00 from holding THAI BEVERAGE or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THAI BEVERAGE vs. Norsk Hydro ASA
Performance |
| Timeline |
| THAI BEVERAGE |
| Norsk Hydro ASA |
THAI BEVERAGE and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THAI BEVERAGE and Norsk Hydro
The main advantage of trading using opposite THAI BEVERAGE and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THAI BEVERAGE 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.| THAI BEVERAGE vs. SERI INDUSTRIAL EO | THAI BEVERAGE vs. CVR Medical Corp | THAI BEVERAGE vs. ADRIATIC METALS LS 013355 | THAI BEVERAGE vs. MEDICAL FACILITIES NEW |
| Norsk Hydro vs. T MOBILE US | Norsk Hydro vs. PT Ace Hardware | Norsk Hydro vs. Align Technology | Norsk Hydro vs. SMA Solar Technology |
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 CEOs Directory module to screen CEOs from public companies around the world.
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