Correlation Between Hilton Food and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Hilton Food 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 Hilton Food and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hilton Food Group and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Hilton Food 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 Hilton Food with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hilton Food and Nordic Semiconductor.
Diversification Opportunities for Hilton Food and Nordic Semiconductor
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hilton and Nordic is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hilton Food Group 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 Hilton Food 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 Hilton Food Group 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 Hilton Food i.e., Hilton Food and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Hilton Food and Nordic Semiconductor
Assuming the 90 days trading horizon Hilton Food Group is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Hilton Food Group is 1.55 times less risky than Nordic Semiconductor. The stock trades about -0.16 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 10,107 in Nordic Semiconductor ASA on October 15, 2024 and sell it today you would earn a total of 836.00 from holding Nordic Semiconductor ASA or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hilton Food Group vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Hilton Food Group |
| Nordic Semiconductor ASA |
Hilton Food and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hilton Food and Nordic Semiconductor
The main advantage of trading using opposite Hilton Food and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hilton Food 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.| Hilton Food vs. Summit Materials Cl | Hilton Food vs. Martin Marietta Materials | Hilton Food vs. Orient Telecoms | Hilton Food vs. Liontrust Asset Management |
| Nordic Semiconductor vs. Hansa Investment | Nordic Semiconductor vs. Cizzle Biotechnology Holdings | Nordic Semiconductor vs. Verizon Communications | Nordic Semiconductor vs. Herald Investment Trust |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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