Correlation Between Nordic Semiconductor and Semiconductor Manufacturing
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Semiconductor Manufacturing 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 Semiconductor Manufacturing 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 Semiconductor Manufacturing International, you can compare the effects of market volatilities on Nordic Semiconductor and Semiconductor Manufacturing 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 Semiconductor Manufacturing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Semiconductor Manufacturing.
Diversification Opportunities for Nordic Semiconductor and Semiconductor Manufacturing
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nordic and Semiconductor is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Semiconductor Manufacturing In in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semiconductor Manufacturing 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 Semiconductor Manufacturing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semiconductor Manufacturing has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Semiconductor Manufacturing go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Semiconductor Manufacturing
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to under-perform the Semiconductor Manufacturing. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Semiconductor ASA is 1.12 times less risky than Semiconductor Manufacturing. The stock trades about -0.01 of its potential returns per unit of risk. The Semiconductor Manufacturing International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 202.00 in Semiconductor Manufacturing International on October 11, 2024 and sell it today you would earn a total of 138.00 from holding Semiconductor Manufacturing International or generate 68.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Semiconductor Manufacturing In
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Semiconductor Manufacturing |
Nordic Semiconductor and Semiconductor Manufacturing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Semiconductor Manufacturing
The main advantage of trading using opposite Nordic Semiconductor and Semiconductor Manufacturing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Semiconductor Manufacturing 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 Semiconductor Manufacturing will offset losses from the drop in Semiconductor Manufacturing's long position.| Nordic Semiconductor vs. Clean Energy Fuels | Nordic Semiconductor vs. Ultra Clean Holdings | Nordic Semiconductor vs. Major Drilling Group | Nordic Semiconductor vs. ZURICH INSURANCE GROUP |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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