Correlation Between ELMOS SEMICONDUCTOR and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELMOS SEMICONDUCTOR and Nordic Semiconductor ASA, you can compare the effects of market volatilities on ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELMOS SEMICONDUCTOR and Nordic Semiconductor.
Diversification Opportunities for ELMOS SEMICONDUCTOR and Nordic Semiconductor
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ELMOS and Nordic is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR 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 ELMOS SEMICONDUCTOR i.e., ELMOS SEMICONDUCTOR and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between ELMOS SEMICONDUCTOR and Nordic Semiconductor
Assuming the 90 days trading horizon ELMOS SEMICONDUCTOR is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, ELMOS SEMICONDUCTOR is 1.46 times less risky than Nordic Semiconductor. The stock trades about -0.01 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 1,094 in Nordic Semiconductor ASA on August 28, 2024 and sell it today you would lose (293.00) from holding Nordic Semiconductor ASA or give up 26.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
ELMOS SEMICONDUCTOR vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| ELMOS SEMICONDUCTOR |
| Nordic Semiconductor ASA |
ELMOS SEMICONDUCTOR and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELMOS SEMICONDUCTOR and Nordic Semiconductor
The main advantage of trading using opposite ELMOS SEMICONDUCTOR and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELMOS SEMICONDUCTOR 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.| ELMOS SEMICONDUCTOR vs. Apple Inc | ELMOS SEMICONDUCTOR vs. Apple Inc | ELMOS SEMICONDUCTOR vs. Microsoft | ELMOS SEMICONDUCTOR vs. Microsoft |
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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 Stocks Directory module to find actively traded stocks across global markets.
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