Correlation Between China Communications and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both China Communications 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 China Communications and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and Nordic Semiconductor ASA, you can compare the effects of market volatilities on China Communications 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 China Communications with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Nordic Semiconductor.
Diversification Opportunities for China Communications and Nordic Semiconductor
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Nordic is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services 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 China Communications 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 China Communications Services 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 China Communications i.e., China Communications and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between China Communications and Nordic Semiconductor
Assuming the 90 days horizon China Communications Services is expected to generate 0.68 times more return on investment than Nordic Semiconductor. However, China Communications Services is 1.46 times less risky than Nordic Semiconductor. It trades about -0.06 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 49.00 in China Communications Services on August 30, 2024 and sell it today you would lose (1.00) from holding China Communications Services or give up 2.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| China Communications |
| Nordic Semiconductor ASA |
China Communications and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Nordic Semiconductor
The main advantage of trading using opposite China Communications and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications 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.| China Communications vs. AVITA Medical | China Communications vs. TRADEGATE | China Communications vs. Merit Medical Systems | China Communications vs. SAFETY MEDICAL PROD |
| Nordic Semiconductor vs. BANKINTER ADR 2007 | Nordic Semiconductor vs. Columbia Sportswear | Nordic Semiconductor vs. Webster Financial | Nordic Semiconductor vs. ARISTOCRAT LEISURE |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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