Correlation Between Norsk Hydro and Wilh Wilhelmsen

Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Wilh Wilhelmsen 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 Norsk Hydro and Wilh Wilhelmsen into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Norsk Hydro ASA and Wilh Wilhelmsen Holding, you can compare the effects of market volatilities on Norsk Hydro and Wilh Wilhelmsen 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 Norsk Hydro with a short position of Wilh Wilhelmsen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Wilh Wilhelmsen.

Diversification Opportunities for Norsk Hydro and Wilh Wilhelmsen

0.0

Correlation Coefficient

Norsk Hydro  Wilh Wilhelmsen

Pay attention - limited upside

The 3 months correlation between Norsk and Wilh is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Wilh Wilhelmsen Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilh Wilhelmsen Holding and Norsk Hydro 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 Norsk Hydro ASA are associated (or correlated) with Wilh Wilhelmsen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilh Wilhelmsen Holding has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Wilh Wilhelmsen go up and down completely randomly.

Pair Corralation between Norsk Hydro and Wilh Wilhelmsen

If you would invest  0.00  in Wilh Wilhelmsen Holding on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Wilh Wilhelmsen Holding or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.67%
Values	Daily Returns

Norsk Hydro ASA  vs.  Wilh Wilhelmsen Holding

Norsk Hydro ASA

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Norsk Hydro ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Wilh Wilhelmsen Holding

Risk-Adjusted Performance

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OK

Over the last 90 days Wilh Wilhelmsen Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, Wilh Wilhelmsen is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Norsk Hydro and Wilh Wilhelmsen

The main advantage of trading using opposite Norsk Hydro and Wilh Wilhelmsen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Wilh Wilhelmsen 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 Wilh Wilhelmsen will offset losses from the drop in Wilh Wilhelmsen's long position.

The idea behind Norsk Hydro ASA and Wilh Wilhelmsen Holding pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.