Correlation Between Learning Technologies and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Learning Technologies 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 Learning Technologies and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Learning Technologies Group and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Learning Technologies 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 Learning Technologies with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Learning Technologies and Nordic Semiconductor.
Diversification Opportunities for Learning Technologies and Nordic Semiconductor
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Learning and Nordic is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Learning Technologies 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 Learning Technologies 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 Learning Technologies 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 Learning Technologies i.e., Learning Technologies and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Learning Technologies and Nordic Semiconductor
Assuming the 90 days trading horizon Learning Technologies Group is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, Learning Technologies Group is 1.29 times less risky than Nordic Semiconductor. The stock trades about -0.17 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 10,373 in Nordic Semiconductor ASA on November 4, 2024 and sell it today you would earn a total of 1,077 from holding Nordic Semiconductor ASA or generate 10.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Learning Technologies Group vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Learning Technologies |
| Nordic Semiconductor ASA |
Learning Technologies and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Learning Technologies and Nordic Semiconductor
The main advantage of trading using opposite Learning Technologies and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Learning Technologies 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.| Learning Technologies vs. Cornish Metals | Learning Technologies vs. Sealed Air Corp | Learning Technologies vs. Central Asia Metals | Learning Technologies vs. Pentair PLC |
| Nordic Semiconductor vs. Xeros Technology Group | Nordic Semiconductor vs. Roper Technologies | Nordic Semiconductor vs. Pressure Technologies Plc | Nordic Semiconductor vs. Universal Display Corp |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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