Correlation Between Nordic Semiconductor and Deep Value
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Deep Value 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 Deep Value 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 Deep Value Driller, you can compare the effects of market volatilities on Nordic Semiconductor and Deep Value 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 Deep Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Deep Value.
Diversification Opportunities for Nordic Semiconductor and Deep Value
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nordic and Deep is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Deep Value Driller in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deep Value Driller 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 Deep Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deep Value Driller has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Deep Value go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Deep Value
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 1.8 times more return on investment than Deep Value. However, Nordic Semiconductor is 1.8 times more volatile than Deep Value Driller. It trades about 0.21 of its potential returns per unit of risk. Deep Value Driller is currently generating about -0.06 per unit of risk. If you would invest 10,295 in Nordic Semiconductor ASA on November 3, 2024 and sell it today you would earn a total of 1,105 from holding Nordic Semiconductor ASA or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Deep Value Driller
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Deep Value Driller |
Nordic Semiconductor and Deep Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Deep Value
The main advantage of trading using opposite Nordic Semiconductor and Deep Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Deep Value 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 Deep Value will offset losses from the drop in Deep Value's long position.| Nordic Semiconductor vs. Storebrand ASA | Nordic Semiconductor vs. DnB ASA | Nordic Semiconductor vs. Telenor ASA | Nordic Semiconductor vs. Kongsberg Gruppen ASA |
| Deep Value vs. Napatech AS | Deep Value vs. Odfjell Technology | Deep Value vs. Jaeren Sparebank | Deep Value vs. 5Th Planet Games |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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