Correlation Between Dairy Farm and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Dairy Farm 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 Dairy Farm and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dairy Farm International and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Dairy Farm 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 Dairy Farm with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dairy Farm and Nordic Semiconductor.
Diversification Opportunities for Dairy Farm and Nordic Semiconductor
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dairy and Nordic is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dairy Farm International 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 Dairy Farm 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 Dairy Farm International 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 Dairy Farm i.e., Dairy Farm and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Dairy Farm and Nordic Semiconductor
Assuming the 90 days trading horizon Dairy Farm International is expected to under-perform the Nordic Semiconductor. In addition to that, Dairy Farm is 1.57 times more volatile than Nordic Semiconductor ASA. It trades about -0.01 of its total potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.69 per unit of volatility. If you would invest 853.00 in Nordic Semiconductor ASA on October 30, 2024 and sell it today you would earn a total of 158.00 from holding Nordic Semiconductor ASA or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dairy Farm International vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Dairy Farm International |
| Nordic Semiconductor ASA |
Dairy Farm and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dairy Farm and Nordic Semiconductor
The main advantage of trading using opposite Dairy Farm and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dairy Farm 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.| Dairy Farm vs. FORWARD AIR P | Dairy Farm vs. Westinghouse Air Brake | Dairy Farm vs. SYSTEMAIR AB | Dairy Farm vs. Wizz Air Holdings |
| Nordic Semiconductor vs. SIEM OFFSHORE NEW | Nordic Semiconductor vs. GEELY AUTOMOBILE | Nordic Semiconductor vs. SOLSTAD OFFSHORE NK | Nordic Semiconductor vs. Wayside Technology Group |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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