Correlation Between MEDICAL FACILITIES and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both MEDICAL FACILITIES 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 MEDICAL FACILITIES and Norsk Hydro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEDICAL FACILITIES NEW and Norsk Hydro ASA, you can compare the effects of market volatilities on MEDICAL FACILITIES 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 MEDICAL FACILITIES with a short position of Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEDICAL FACILITIES and Norsk Hydro.
Diversification Opportunities for MEDICAL FACILITIES and Norsk Hydro
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MEDICAL and Norsk is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding MEDICAL FACILITIES NEW 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 MEDICAL FACILITIES 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 MEDICAL FACILITIES NEW 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 MEDICAL FACILITIES i.e., MEDICAL FACILITIES and Norsk Hydro go up and down completely randomly.
Pair Corralation between MEDICAL FACILITIES and Norsk Hydro
Assuming the 90 days horizon MEDICAL FACILITIES NEW is expected to generate 0.74 times more return on investment than Norsk Hydro. However, MEDICAL FACILITIES NEW is 1.36 times less risky than Norsk Hydro. It trades about 0.07 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 510.00 in MEDICAL FACILITIES NEW on December 1, 2024 and sell it today you would earn a total of 630.00 from holding MEDICAL FACILITIES NEW or generate 123.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
MEDICAL FACILITIES NEW vs. Norsk Hydro ASA
Performance |
Timeline |
MEDICAL FACILITIES NEW |
Norsk Hydro ASA |
MEDICAL FACILITIES and Norsk Hydro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MEDICAL FACILITIES and Norsk Hydro
The main advantage of trading using opposite MEDICAL FACILITIES and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEDICAL FACILITIES 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.MEDICAL FACILITIES vs. Strategic Education | MEDICAL FACILITIES vs. Monster Beverage Corp | MEDICAL FACILITIES vs. THAI BEVERAGE | MEDICAL FACILITIES vs. CanSino Biologics |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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