Correlation Between Nordic Semiconductor and YAOKO
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and YAOKO 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 Nordic Semiconductor and YAOKO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Semiconductor ASA and YAOKO LTD, you can compare the effects of market volatilities on Nordic Semiconductor and YAOKO 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 Nordic Semiconductor with a short position of YAOKO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and YAOKO.
Diversification Opportunities for Nordic Semiconductor and YAOKO
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nordic and YAOKO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and YAOKO LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YAOKO LTD and Nordic Semiconductor 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 Nordic Semiconductor ASA are associated (or correlated) with YAOKO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YAOKO LTD has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and YAOKO go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and YAOKO
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to under-perform the YAOKO. In addition to that, Nordic Semiconductor is 2.1 times more volatile than YAOKO LTD. It trades about -0.05 of its total potential returns per unit of risk. YAOKO LTD is currently generating about 0.04 per unit of volatility. If you would invest 5,350 in YAOKO LTD on September 1, 2024 and sell it today you would earn a total of 450.00 from holding YAOKO LTD or generate 8.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.24% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. YAOKO LTD
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| YAOKO LTD |
Nordic Semiconductor and YAOKO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and YAOKO
The main advantage of trading using opposite Nordic Semiconductor and YAOKO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, YAOKO 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 YAOKO will offset losses from the drop in YAOKO's long position.The idea behind Nordic Semiconductor ASA and YAOKO LTD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| YAOKO vs. Zijin Mining Group | YAOKO vs. GRIFFIN MINING LTD | YAOKO vs. Geely Automobile Holdings | YAOKO vs. Cars Inc |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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