Correlation Between Nordic Semiconductor and Datang International
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Datang International 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 Datang International 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 Datang International Power, you can compare the effects of market volatilities on Nordic Semiconductor and Datang International 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 Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Datang International.
Diversification Opportunities for Nordic Semiconductor and Datang International
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordic and Datang is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International 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 Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Datang International go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Datang International
Assuming the 90 days horizon Nordic Semiconductor is expected to generate 1.01 times less return on investment than Datang International. In addition to that, Nordic Semiconductor is 1.04 times more volatile than Datang International Power. It trades about 0.03 of its total potential returns per unit of risk. Datang International Power is currently generating about 0.03 per unit of volatility. If you would invest 13.00 in Datang International Power on December 13, 2024 and sell it today you would earn a total of 3.00 from holding Datang International Power or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Datang International Power
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Datang International |
Nordic Semiconductor and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Datang International
The main advantage of trading using opposite Nordic Semiconductor and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| Nordic Semiconductor vs. Yanzhou Coal Mining | ||
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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