Correlation Between Nordic Semiconductor and BYD
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and BYD 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 BYD 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 BYD Co, you can compare the effects of market volatilities on Nordic Semiconductor and BYD 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 BYD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and BYD.
Diversification Opportunities for Nordic Semiconductor and BYD
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nordic and BYD is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and BYD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BYD Co 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 BYD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BYD Co has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and BYD go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and BYD
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 0.37 times more return on investment than BYD. However, Nordic Semiconductor ASA is 2.68 times less risky than BYD. It trades about 0.51 of its potential returns per unit of risk. BYD Co is currently generating about 0.03 per unit of risk. If you would invest 9,929 in Nordic Semiconductor ASA on October 25, 2024 and sell it today you would earn a total of 2,106 from holding Nordic Semiconductor ASA or generate 21.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. BYD Co
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| BYD Co |
Nordic Semiconductor and BYD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and BYD
The main advantage of trading using opposite Nordic Semiconductor and BYD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, BYD 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 BYD will offset losses from the drop in BYD's long position.| Nordic Semiconductor vs. Learning Technologies Group | Nordic Semiconductor vs. Coor Service Management | Nordic Semiconductor vs. MTI Wireless Edge | Nordic Semiconductor vs. Allianz Technology Trust |
| BYD vs. LBG Media PLC | BYD vs. Synthomer plc | BYD vs. G5 Entertainment AB | BYD vs. Ecclesiastical Insurance Office |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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