Correlation Between Norsk Hydro and Amkor Technology
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Amkor Technology 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 Amkor Technology 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 Amkor Technology, you can compare the effects of market volatilities on Norsk Hydro and Amkor Technology 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 Amkor Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Amkor Technology.
Diversification Opportunities for Norsk Hydro and Amkor Technology
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Norsk and Amkor is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Amkor Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amkor Technology 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 Amkor Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amkor Technology has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Amkor Technology go up and down completely randomly.
Pair Corralation between Norsk Hydro and Amkor Technology
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 1.06 times more return on investment than Amkor Technology. However, Norsk Hydro is 1.06 times more volatile than Amkor Technology. It trades about -0.02 of its potential returns per unit of risk. Amkor Technology is currently generating about -0.06 per unit of risk. If you would invest 557.00 in Norsk Hydro ASA on September 25, 2024 and sell it today you would lose (28.00) from holding Norsk Hydro ASA or give up 5.03% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Norsk Hydro ASA vs. Amkor Technology
Performance |
Timeline |
Norsk Hydro ASA |
Amkor Technology |
Norsk Hydro and Amkor Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Norsk Hydro and Amkor Technology
The main advantage of trading using opposite Norsk Hydro and Amkor Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Amkor Technology 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 Amkor Technology will offset losses from the drop in Amkor Technology's long position.Norsk Hydro vs. Norsk Hydro ASA | Norsk Hydro vs. Alcoa Corp | Norsk Hydro vs. AMAG Austria Metall | Norsk Hydro vs. Kaiser Aluminum |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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