Correlation Between Advanced Micro and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Advanced Micro 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 Advanced Micro and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Micro Devices and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Advanced Micro 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 Advanced Micro with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Micro and Nordic Semiconductor.
Diversification Opportunities for Advanced Micro and Nordic Semiconductor
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Nordic is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices 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 Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Advanced Micro and Nordic Semiconductor
Assuming the 90 days trading horizon Advanced Micro Devices is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Advanced Micro Devices is 1.42 times less risky than Nordic Semiconductor. The stock trades about -0.04 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 900.00 in Nordic Semiconductor ASA on November 1, 2024 and sell it today you would earn a total of 53.00 from holding Nordic Semiconductor ASA or generate 5.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Advanced Micro Devices vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Advanced Micro Devices |
| Nordic Semiconductor ASA |
Advanced Micro and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Micro and Nordic Semiconductor
The main advantage of trading using opposite Advanced Micro and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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.| Advanced Micro vs. G III Apparel Group | Advanced Micro vs. MACOM Technology Solutions | Advanced Micro vs. X FAB Silicon Foundries | Advanced Micro vs. Kingdee International Software |
| Nordic Semiconductor vs. WILLIS LEASE FIN | Nordic Semiconductor vs. LOANDEPOT INC A | Nordic Semiconductor vs. Global Ship Lease | Nordic Semiconductor vs. Air Lease |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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