Correlation Between Nordic Semiconductor and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Samsung Electronics 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 Samsung Electronics 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 Samsung Electronics Co, you can compare the effects of market volatilities on Nordic Semiconductor and Samsung Electronics 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 Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Samsung Electronics.
Diversification Opportunities for Nordic Semiconductor and Samsung Electronics
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nordic and Samsung is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung 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 Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Samsung Electronics go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Samsung Electronics
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to under-perform the Samsung Electronics. In addition to that, Nordic Semiconductor is 2.17 times more volatile than Samsung Electronics Co. It trades about -0.02 of its total potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.02 per unit of volatility. If you would invest 107,121 in Samsung Electronics Co on August 31, 2024 and sell it today you would lose (23,321) from holding Samsung Electronics Co or give up 21.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Samsung Electronics Co
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Samsung Electronics |
Nordic Semiconductor and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Samsung Electronics
The main advantage of trading using opposite Nordic Semiconductor and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Nordic Semiconductor vs. Neometals | Nordic Semiconductor vs. Coor Service Management | Nordic Semiconductor vs. Aeorema Communications Plc | Nordic Semiconductor vs. JLEN Environmental Assets |
| Samsung Electronics vs. Kaufman Et Broad | Samsung Electronics vs. Allianz Technology Trust | Samsung Electronics vs. Monster Beverage Corp | Samsung Electronics vs. Gaztransport et Technigaz |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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