Correlation Between CREMECOMTRSBI and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both CREMECOMTRSBI 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 CREMECOMTRSBI and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CREMECOMTRSBI DL 001 and Norsk Hydro ASA, you can compare the effects of market volatilities on CREMECOMTRSBI 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 CREMECOMTRSBI with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of CREMECOMTRSBI and Norsk Hydro.
Diversification Opportunities for CREMECOMTRSBI and Norsk Hydro
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CREMECOMTRSBI and Norsk is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding CREMECOMTRSBI DL 001 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 CREMECOMTRSBI 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 CREMECOMTRSBI DL 001 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 CREMECOMTRSBI i.e., CREMECOMTRSBI and Norsk Hydro go up and down completely randomly.
Pair Corralation between CREMECOMTRSBI and Norsk Hydro
Assuming the 90 days trading horizon CREMECOMTRSBI DL 001 is expected to generate 26.34 times more return on investment than Norsk Hydro. However, CREMECOMTRSBI is 26.34 times more volatile than Norsk Hydro ASA. It trades about 0.13 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about -0.03 per unit of risk. If you would invest 53.00 in CREMECOMTRSBI DL 001 on September 13, 2024 and sell it today you would lose (33.00) from holding CREMECOMTRSBI DL 001 or give up 62.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CREMECOMTRSBI DL 001 vs. Norsk Hydro ASA
Performance |
| Timeline |
| CREMECOMTRSBI DL 001 |
| Norsk Hydro ASA |
CREMECOMTRSBI and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CREMECOMTRSBI and Norsk Hydro
The main advantage of trading using opposite CREMECOMTRSBI and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CREMECOMTRSBI 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.| CREMECOMTRSBI vs. Office Properties Income | CREMECOMTRSBI vs. CITY OFFICE REIT | CREMECOMTRSBI vs. Superior Plus Corp | CREMECOMTRSBI vs. SIVERS SEMICONDUCTORS AB |
| Norsk Hydro vs. Goosehead Insurance | Norsk Hydro vs. RETAIL FOOD GROUP | Norsk Hydro vs. COSTCO WHOLESALE CDR | Norsk Hydro vs. SBI Insurance Group |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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