Correlation Between Alibaba Health and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Alibaba Health 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 Alibaba Health and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alibaba Health Information and Norsk Hydro ASA, you can compare the effects of market volatilities on Alibaba Health 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 Alibaba Health with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alibaba Health and Norsk Hydro.
Diversification Opportunities for Alibaba Health and Norsk Hydro
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Alibaba and Norsk is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Alibaba Health Information 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 Alibaba Health 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 Alibaba Health Information 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 Alibaba Health i.e., Alibaba Health and Norsk Hydro go up and down completely randomly.
Pair Corralation between Alibaba Health and Norsk Hydro
Assuming the 90 days horizon Alibaba Health Information is expected to generate 2.12 times more return on investment than Norsk Hydro. However, Alibaba Health is 2.12 times more volatile than Norsk Hydro ASA. It trades about 0.04 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about 0.05 per unit of risk. If you would invest 37.00 in Alibaba Health Information on October 25, 2024 and sell it today you would earn a total of 3.00 from holding Alibaba Health Information or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alibaba Health Information vs. Norsk Hydro ASA
Performance |
| Timeline |
| Alibaba Health Infor |
| Norsk Hydro ASA |
Alibaba Health and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alibaba Health and Norsk Hydro
The main advantage of trading using opposite Alibaba Health and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alibaba Health 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.| Alibaba Health vs. Walgreens Boots Alliance | Alibaba Health vs. Superior Plus Corp | Alibaba Health vs. Origin Agritech | Alibaba Health vs. Identiv |
| Norsk Hydro vs. Check Point Software | Norsk Hydro vs. VULCAN MATERIALS | Norsk Hydro vs. Summit Materials | Norsk Hydro vs. Casio Computer CoLtd |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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