Correlation Between Japan Tobacco and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Japan Tobacco 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 Japan Tobacco and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Tobacco and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Japan Tobacco 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 Japan Tobacco with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Tobacco and Nordic Semiconductor.
Diversification Opportunities for Japan Tobacco and Nordic Semiconductor
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Japan and Nordic is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Japan Tobacco 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 Japan Tobacco 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 Japan Tobacco 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 Japan Tobacco i.e., Japan Tobacco and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Japan Tobacco and Nordic Semiconductor
Assuming the 90 days horizon Japan Tobacco is expected to under-perform the Nordic Semiconductor. In addition to that, Japan Tobacco is 1.29 times more volatile than Nordic Semiconductor ASA. It trades about -0.06 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Tobacco vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Japan Tobacco |
| Nordic Semiconductor ASA |
Japan Tobacco and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Tobacco and Nordic Semiconductor
The main advantage of trading using opposite Japan Tobacco and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Tobacco 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.| Japan Tobacco vs. NEWELL RUBBERMAID | Japan Tobacco vs. Planet Fitness | Japan Tobacco vs. SANOK RUBBER ZY | Japan Tobacco vs. GOODYEAR T RUBBER |
| 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |