Correlation Between Nordic Semiconductor and GigaMedia
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and GigaMedia 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 GigaMedia 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 GigaMedia, you can compare the effects of market volatilities on Nordic Semiconductor and GigaMedia 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 GigaMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and GigaMedia.
Diversification Opportunities for Nordic Semiconductor and GigaMedia
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nordic and GigaMedia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and GigaMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigaMedia 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 GigaMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigaMedia has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and GigaMedia go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and GigaMedia
Assuming the 90 days horizon Nordic Semiconductor is expected to generate 1.26 times less return on investment than GigaMedia. But when comparing it to its historical volatility, Nordic Semiconductor ASA is 1.97 times less risky than GigaMedia. It trades about 0.31 of its potential returns per unit of risk. GigaMedia is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 133.00 in GigaMedia on October 19, 2024 and sell it today you would earn a total of 15.00 from holding GigaMedia or generate 11.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. GigaMedia
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| GigaMedia |
Nordic Semiconductor and GigaMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and GigaMedia
The main advantage of trading using opposite Nordic Semiconductor and GigaMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, GigaMedia 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 GigaMedia will offset losses from the drop in GigaMedia's long position.| Nordic Semiconductor vs. TIANDE CHEMICAL | Nordic Semiconductor vs. KINGBOARD CHEMICAL | Nordic Semiconductor vs. Siamgas And Petrochemicals | Nordic Semiconductor vs. Mitsubishi Gas Chemical |
| GigaMedia vs. VULCAN MATERIALS | GigaMedia vs. APPLIED MATERIALS | GigaMedia vs. Applied Materials | GigaMedia vs. Nordic Semiconductor ASA |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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