Correlation Between Aker Carbon and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Aker Carbon and Nordic Semiconductor 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 Aker Carbon and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aker Carbon Capture and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Aker Carbon and Nordic Semiconductor 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 Aker Carbon with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aker Carbon and Nordic Semiconductor.
Diversification Opportunities for Aker Carbon and Nordic Semiconductor
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aker and Nordic is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Aker Carbon Capture and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA and Aker Carbon 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 Aker Carbon Capture are associated (or correlated) with Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Aker Carbon i.e., Aker Carbon and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Aker Carbon and Nordic Semiconductor
Assuming the 90 days trading horizon Aker Carbon Capture is expected to generate 0.88 times more return on investment than Nordic Semiconductor. However, Aker Carbon Capture is 1.13 times less risky than Nordic Semiconductor. It trades about -0.13 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.13 per unit of risk. If you would invest 612.00 in Aker Carbon Capture on August 25, 2024 and sell it today you would lose (34.00) from holding Aker Carbon Capture or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aker Carbon Capture vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Aker Carbon Capture |
| Nordic Semiconductor ASA |
Aker Carbon and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aker Carbon and Nordic Semiconductor
The main advantage of trading using opposite Aker Carbon and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aker Carbon position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.The idea behind Aker Carbon Capture and Nordic Semiconductor ASA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Nordic Semiconductor vs. Storebrand ASA | Nordic Semiconductor vs. DnB ASA | Nordic Semiconductor vs. Telenor ASA | Nordic Semiconductor vs. Kongsberg Gruppen ASA |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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