Correlation Between Nordic Aqua and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Nordic Aqua and Nordic Semiconductor 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 Aqua and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Aqua Partners and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Nordic Aqua and Nordic Semiconductor 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 Aqua with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Aqua and Nordic Semiconductor.
Diversification Opportunities for Nordic Aqua and Nordic Semiconductor
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Nordic and Nordic is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Aqua Partners and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA and Nordic Aqua 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 Aqua Partners are associated (or correlated) with Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Nordic Aqua i.e., Nordic Aqua and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Nordic Aqua and Nordic Semiconductor
Assuming the 90 days trading horizon Nordic Aqua Partners is expected to generate 0.91 times more return on investment than Nordic Semiconductor. However, Nordic Aqua Partners is 1.1 times less risky than Nordic Semiconductor. It trades about -0.14 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.2 per unit of risk. If you would invest 7,700 in Nordic Aqua Partners on August 29, 2024 and sell it today you would lose (450.00) from holding Nordic Aqua Partners or give up 5.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Aqua Partners vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Nordic Aqua Partners |
| Nordic Semiconductor ASA |
Nordic Aqua and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Aqua and Nordic Semiconductor
The main advantage of trading using opposite Nordic Aqua and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Aqua position performs unexpectedly, Nordic Semiconductor 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 Nordic Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| Nordic Aqua vs. Nordic Semiconductor ASA | Nordic Aqua vs. Nidaros Sparebank | Nordic Aqua vs. Cloudberry Clean Energy | Nordic Aqua vs. Jaeren Sparebank |
| Nordic Semiconductor vs. Storebrand ASA | Nordic Semiconductor vs. DnB ASA | Nordic Semiconductor vs. Telenor ASA | Nordic Semiconductor vs. Kongsberg Gruppen 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 CEOs Directory module to screen CEOs from public companies around the world.
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