Correlation Between Nordic Semiconductor and Litigation Capital
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Litigation Capital 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 Litigation Capital 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 Litigation Capital Management, you can compare the effects of market volatilities on Nordic Semiconductor and Litigation Capital 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 Litigation Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Litigation Capital.
Diversification Opportunities for Nordic Semiconductor and Litigation Capital
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and Litigation is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Litigation Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Litigation Capital 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 Litigation Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Litigation Capital has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Litigation Capital go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Litigation Capital
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 1.42 times more return on investment than Litigation Capital. However, Nordic Semiconductor is 1.42 times more volatile than Litigation Capital Management. It trades about 0.24 of its potential returns per unit of risk. Litigation Capital Management is currently generating about 0.01 per unit of risk. If you would invest 10,107 in Nordic Semiconductor ASA on October 16, 2024 and sell it today you would earn a total of 983.00 from holding Nordic Semiconductor ASA or generate 9.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Litigation Capital Management
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Litigation Capital |
Nordic Semiconductor and Litigation Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Litigation Capital
The main advantage of trading using opposite Nordic Semiconductor and Litigation Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Litigation Capital 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 Litigation Capital will offset losses from the drop in Litigation Capital's long position.| Nordic Semiconductor vs. DXC Technology Co | Nordic Semiconductor vs. Aptitude Software Group | Nordic Semiconductor vs. Vitec Software Group | Nordic Semiconductor vs. SMA Solar Technology |
| Litigation Capital vs. Ecofin Global Utilities | Litigation Capital vs. Porvair plc | Litigation Capital vs. Finnair Oyj | Litigation Capital vs. Wizz Air Holdings |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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