Correlation Between DnB ASA and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both DnB ASA 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 DnB ASA and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DnB ASA and Nordic Semiconductor ASA, you can compare the effects of market volatilities on DnB ASA 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 DnB ASA with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of DnB ASA and Nordic Semiconductor.
Diversification Opportunities for DnB ASA and Nordic Semiconductor
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DnB and Nordic is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding DnB ASA 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 DnB ASA 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 DnB ASA 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 DnB ASA i.e., DnB ASA and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between DnB ASA and Nordic Semiconductor
Assuming the 90 days trading horizon DnB ASA is expected to generate 0.29 times more return on investment than Nordic Semiconductor. However, DnB ASA is 3.42 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 0.02 per unit of risk. If you would invest 17,988 in DnB ASA on November 19, 2024 and sell it today you would earn a total of 5,992 from holding DnB ASA or generate 33.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DnB ASA vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| DnB ASA |
| Nordic Semiconductor ASA |
DnB ASA and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DnB ASA and Nordic Semiconductor
The main advantage of trading using opposite DnB ASA and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DnB ASA 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.| DnB ASA vs. Telenor ASA | DnB ASA vs. Storebrand ASA | DnB ASA vs. Orkla ASA | DnB ASA vs. Gjensidige Forsikring ASA |
| 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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