Correlation Between Nordic Semiconductor and Meli Hotels
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Meli Hotels 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 Meli Hotels 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 Meli Hotels International, you can compare the effects of market volatilities on Nordic Semiconductor and Meli Hotels 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 Meli Hotels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Meli Hotels.
Diversification Opportunities for Nordic Semiconductor and Meli Hotels
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordic and Meli is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Meli Hotels International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meli Hotels 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 Meli Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meli Hotels International has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Meli Hotels go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Meli Hotels
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 0.99 times more return on investment than Meli Hotels. However, Nordic Semiconductor ASA is 1.01 times less risky than Meli Hotels. It trades about 0.3 of its potential returns per unit of risk. Meli Hotels International is currently generating about 0.06 per unit of risk. If you would invest 843.00 in Nordic Semiconductor ASA on October 30, 2024 and sell it today you would earn a total of 168.00 from holding Nordic Semiconductor ASA or generate 19.93% 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. Meli Hotels International
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Meli Hotels International |
Nordic Semiconductor and Meli Hotels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Meli Hotels
The main advantage of trading using opposite Nordic Semiconductor and Meli Hotels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Meli Hotels 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 Meli Hotels will offset losses from the drop in Meli Hotels' long position.| Nordic Semiconductor vs. SIEM OFFSHORE NEW | Nordic Semiconductor vs. GEELY AUTOMOBILE | Nordic Semiconductor vs. SOLSTAD OFFSHORE NK | Nordic Semiconductor vs. Wayside Technology Group |
| Meli Hotels vs. MCEWEN MINING INC | Meli Hotels vs. Entravision Communications | Meli Hotels vs. CARSALESCOM | Meli Hotels vs. GEELY AUTOMOBILE |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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