Correlation Between Nordic Semiconductor and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and LPKF Laser 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 Nordic Semiconductor and LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Semiconductor ASA and LPKF Laser Electronics, you can compare the effects of market volatilities on Nordic Semiconductor and LPKF Laser 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 Nordic Semiconductor with a short position of LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and LPKF Laser.
Diversification Opportunities for Nordic Semiconductor and LPKF Laser
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and LPKF is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics and Nordic Semiconductor 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 Nordic Semiconductor ASA are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and LPKF Laser go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and LPKF Laser
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 2.0 times more return on investment than LPKF Laser. However, Nordic Semiconductor is 2.0 times more volatile than LPKF Laser Electronics. It trades about 0.0 of its potential returns per unit of risk. LPKF Laser Electronics is currently generating about -0.01 per unit of risk. If you would invest 11,272 in Nordic Semiconductor ASA on September 4, 2024 and sell it today you would lose (1,466) from holding Nordic Semiconductor ASA or give up 13.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. LPKF Laser Electronics
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| LPKF Laser Electronics |
Nordic Semiconductor and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and LPKF Laser
The main advantage of trading using opposite Nordic Semiconductor and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Nordic Semiconductor vs. Wyndham Hotels Resorts | Nordic Semiconductor vs. BW Offshore | Nordic Semiconductor vs. Gear4music Plc | Nordic Semiconductor vs. Morgan Advanced Materials |
| LPKF Laser vs. Samsung Electronics Co | LPKF Laser vs. Samsung Electronics Co | LPKF Laser vs. Hyundai Motor | LPKF Laser vs. Toyota Motor Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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