Correlation Between Nordic Semiconductor and Carsales
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Carsales 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 Carsales 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 Carsales, you can compare the effects of market volatilities on Nordic Semiconductor and Carsales 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 Carsales. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Carsales.
Diversification Opportunities for Nordic Semiconductor and Carsales
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and Carsales is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Carsales in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carsales 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 Carsales. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carsales has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Carsales go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Carsales
Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 1.4 times more return on investment than Carsales. However, Nordic Semiconductor is 1.4 times more volatile than Carsales. It trades about 0.06 of its potential returns per unit of risk. Carsales is currently generating about -0.22 per unit of risk. If you would invest 842.00 in Nordic Semiconductor ASA on September 19, 2024 and sell it today you would earn a total of 19.00 from holding Nordic Semiconductor ASA or generate 2.26% 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. Carsales
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Carsales |
Nordic Semiconductor and Carsales Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Carsales
The main advantage of trading using opposite Nordic Semiconductor and Carsales positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Carsales 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 Carsales will offset losses from the drop in Carsales' long position.| Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Broadcom | Nordic Semiconductor vs. Superior Plus Corp | Nordic Semiconductor vs. Norsk Hydro ASA |
| Carsales vs. Choice Hotels International | Carsales vs. Host Hotels Resorts | Carsales vs. Gol Intelligent Airlines | Carsales vs. DALATA HOTEL |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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