Correlation Between Lenovo Group and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Lenovo Group 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 Lenovo Group and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lenovo Group Limited and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Lenovo Group 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 Lenovo Group with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenovo Group and Nordic Semiconductor.
Diversification Opportunities for Lenovo Group and Nordic Semiconductor
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lenovo and Nordic is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lenovo Group Limited 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 Lenovo Group 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 Lenovo Group Limited 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 Lenovo Group i.e., Lenovo Group and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Lenovo Group and Nordic Semiconductor
Assuming the 90 days trading horizon Lenovo Group is expected to generate 38.99 times less return on investment than Nordic Semiconductor. In addition to that, Lenovo Group is 2.17 times more volatile than Nordic Semiconductor ASA. It trades about 0.0 of its total potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.32 per unit of volatility. If you would invest 873.00 in Nordic Semiconductor ASA on October 20, 2024 and sell it today you would earn a total of 83.00 from holding Nordic Semiconductor ASA or generate 9.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Lenovo Group Limited vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Lenovo Group Limited |
| Nordic Semiconductor ASA |
Lenovo Group and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenovo Group and Nordic Semiconductor
The main advantage of trading using opposite Lenovo Group and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenovo Group 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.| Lenovo Group vs. ANTA SPORTS PRODUCT | Lenovo Group vs. Transport International Holdings | Lenovo Group vs. SOEDER SPORTFISKE AB | Lenovo Group vs. TOREX SEMICONDUCTOR LTD |
| Nordic Semiconductor vs. Retail Estates NV | Nordic Semiconductor vs. H2O Retailing | Nordic Semiconductor vs. JIAHUA STORES | Nordic Semiconductor vs. Fast Retailing Co |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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