Correlation Between MAGNUM MINING and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both MAGNUM MINING 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 MAGNUM MINING and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAGNUM MINING EXP and Nordic Semiconductor ASA, you can compare the effects of market volatilities on MAGNUM MINING 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 MAGNUM MINING with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAGNUM MINING and Nordic Semiconductor.
Diversification Opportunities for MAGNUM MINING and Nordic Semiconductor
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between MAGNUM and Nordic is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding MAGNUM MINING EXP 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 MAGNUM MINING 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 MAGNUM MINING EXP 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 MAGNUM MINING i.e., MAGNUM MINING and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between MAGNUM MINING and Nordic Semiconductor
Assuming the 90 days trading horizon MAGNUM MINING EXP is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, MAGNUM MINING EXP is 3.2 times less risky than Nordic Semiconductor. The stock trades about -0.04 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,397 in Nordic Semiconductor ASA on December 13, 2024 and sell it today you would lose (264.00) from holding Nordic Semiconductor ASA or give up 18.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAGNUM MINING EXP vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| MAGNUM MINING EXP |
| Nordic Semiconductor ASA |
MAGNUM MINING and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAGNUM MINING and Nordic Semiconductor
The main advantage of trading using opposite MAGNUM MINING and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAGNUM MINING 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.| MAGNUM MINING vs. SCOTT TECHNOLOGY | ||
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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