Correlation Between Lea Bank and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Lea Bank 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 Lea Bank and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lea Bank ASA and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Lea Bank 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 Lea Bank with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lea Bank and Nordic Semiconductor.
Diversification Opportunities for Lea Bank and Nordic Semiconductor
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Lea and Nordic is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Lea Bank 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 Lea Bank 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 Lea Bank 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 Lea Bank i.e., Lea Bank and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Lea Bank and Nordic Semiconductor
Assuming the 90 days trading horizon Lea Bank ASA is expected to generate 1.38 times more return on investment than Nordic Semiconductor. However, Lea Bank is 1.38 times more volatile than Nordic Semiconductor ASA. It trades about 0.2 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.23 per unit of risk. If you would invest 875.00 in Lea Bank ASA on September 1, 2024 and sell it today you would earn a total of 95.00 from holding Lea Bank ASA or generate 10.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lea Bank ASA vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Lea Bank ASA |
| Nordic Semiconductor ASA |
Lea Bank and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lea Bank and Nordic Semiconductor
The main advantage of trading using opposite Lea Bank and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lea Bank 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.| Lea Bank vs. Grong Sparebank | Lea Bank vs. Austevoll Seafood ASA | Lea Bank vs. SD Standard Drilling | Lea Bank vs. NorAm Drilling AS |
| 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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