Correlation Between Nordic Semiconductor and EAM Solar
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and EAM Solar 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 EAM Solar 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 EAM Solar ASA, you can compare the effects of market volatilities on Nordic Semiconductor and EAM Solar 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 EAM Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and EAM Solar.
Diversification Opportunities for Nordic Semiconductor and EAM Solar
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nordic and EAM is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and EAM Solar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAM Solar ASA 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 EAM Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAM Solar ASA has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and EAM Solar go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and EAM Solar
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to under-perform the EAM Solar. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Semiconductor ASA is 9.16 times less risky than EAM Solar. The stock trades about -0.01 of its potential returns per unit of risk. The EAM Solar ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 586.00 in EAM Solar ASA on September 14, 2024 and sell it today you would lose (570.00) from holding EAM Solar ASA or give up 97.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. EAM Solar ASA
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| EAM Solar ASA |
Nordic Semiconductor and EAM Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and EAM Solar
The main advantage of trading using opposite Nordic Semiconductor and EAM Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, EAM Solar 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 EAM Solar will offset losses from the drop in EAM Solar's long position.| Nordic Semiconductor vs. Storebrand ASA | Nordic Semiconductor vs. DnB ASA | Nordic Semiconductor vs. Telenor ASA | Nordic Semiconductor vs. Kongsberg Gruppen ASA |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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