Correlation Between Lion Biotechnologies and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Lion Biotechnologies and NXP Semiconductors 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 Lion Biotechnologies and NXP Semiconductors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion Biotechnologies and NXP Semiconductors NV, you can compare the effects of market volatilities on Lion Biotechnologies and NXP Semiconductors 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 Lion Biotechnologies with a short position of NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion Biotechnologies and NXP Semiconductors.
Diversification Opportunities for Lion Biotechnologies and NXP Semiconductors
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lion and NXP is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lion Biotechnologies and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors and Lion Biotechnologies 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 Lion Biotechnologies are associated (or correlated) with NXP Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXP Semiconductors has no effect on the direction of Lion Biotechnologies i.e., Lion Biotechnologies and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Lion Biotechnologies and NXP Semiconductors
Assuming the 90 days trading horizon Lion Biotechnologies is expected to under-perform the NXP Semiconductors. In addition to that, Lion Biotechnologies is 1.82 times more volatile than NXP Semiconductors NV. It trades about -0.1 of its total potential returns per unit of risk. NXP Semiconductors NV is currently generating about -0.01 per unit of volatility. If you would invest 22,600 in NXP Semiconductors NV on August 28, 2024 and sell it today you would lose (300.00) from holding NXP Semiconductors NV or give up 1.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lion Biotechnologies vs. NXP Semiconductors NV
Performance |
| Timeline |
| Lion Biotechnologies |
| NXP Semiconductors |
Lion Biotechnologies and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lion Biotechnologies and NXP Semiconductors
The main advantage of trading using opposite Lion Biotechnologies and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion Biotechnologies position performs unexpectedly, NXP Semiconductors 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 NXP Semiconductors will offset losses from the drop in NXP Semiconductors' long position.| Lion Biotechnologies vs. Nucletron Electronic Aktiengesellschaft | Lion Biotechnologies vs. ELECTRONIC ARTS | Lion Biotechnologies vs. Electronic Arts | Lion Biotechnologies vs. BYD ELECTRONIC |
| NXP Semiconductors vs. Apple Inc | NXP Semiconductors vs. Apple Inc | NXP Semiconductors vs. Microsoft | NXP Semiconductors vs. Microsoft |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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