Correlation Between Nordic Semiconductor and Nufarm
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Nufarm 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 Nufarm 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 Nufarm Limited, you can compare the effects of market volatilities on Nordic Semiconductor and Nufarm 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 Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Nufarm.
Diversification Opportunities for Nordic Semiconductor and Nufarm
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and Nufarm is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited 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 Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Nufarm go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Nufarm
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to under-perform the Nufarm. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Semiconductor ASA is 1.03 times less risky than Nufarm. The stock trades about -0.2 of its potential returns per unit of risk. The Nufarm Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 226.00 in Nufarm Limited on August 31, 2024 and sell it today you would earn a total of 6.00 from holding Nufarm Limited or generate 2.65% 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. Nufarm Limited
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Nufarm Limited |
Nordic Semiconductor and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Nufarm
The main advantage of trading using opposite Nordic Semiconductor and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Nufarm 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 Nufarm will offset losses from the drop in Nufarm's long position.| Nordic Semiconductor vs. NVIDIA | Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Advanced Micro Devices | Nordic Semiconductor vs. Intel |
| Nufarm vs. FANDIFI TECHNOLOGY P | Nufarm vs. Major Drilling Group | Nufarm vs. Nordic Semiconductor ASA | Nufarm vs. PRECISION DRILLING P |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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