Correlation Between Talanx AG and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Talanx AG 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 Talanx AG and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Talanx AG and Norsk Hydro ASA, you can compare the effects of market volatilities on Talanx AG 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 Talanx AG with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Talanx AG and Norsk Hydro.
Diversification Opportunities for Talanx AG and Norsk Hydro
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Talanx and Norsk is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Talanx AG 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 Talanx AG 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 Talanx AG 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 Talanx AG i.e., Talanx AG and Norsk Hydro go up and down completely randomly.
Pair Corralation between Talanx AG and Norsk Hydro
Assuming the 90 days horizon Talanx AG is expected to generate 0.38 times more return on investment than Norsk Hydro. However, Talanx AG is 2.61 times less risky than Norsk Hydro. It trades about 0.11 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.04 per unit of risk. If you would invest 4,030 in Talanx AG on August 27, 2024 and sell it today you would earn a total of 3,840 from holding Talanx AG or generate 95.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Talanx AG vs. Norsk Hydro ASA
Performance |
| Timeline |
| Talanx AG |
| Norsk Hydro ASA |
Talanx AG and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Talanx AG and Norsk Hydro
The main advantage of trading using opposite Talanx AG and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Talanx AG 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.| Talanx AG vs. NIPPON STEEL SPADR | Talanx AG vs. Insteel Industries | Talanx AG vs. Zijin Mining Group | Talanx AG vs. COSMOSTEEL HLDGS |
| Norsk Hydro vs. MAGIC SOFTWARE ENTR | Norsk Hydro vs. COMINTL BANK ADR1 | Norsk Hydro vs. National Bank Holdings | Norsk Hydro vs. Commonwealth Bank of |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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