Correlation Between Nordic Semiconductor and Instabank ASA
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Instabank ASA 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 Instabank ASA 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 Instabank ASA, you can compare the effects of market volatilities on Nordic Semiconductor and Instabank ASA 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 Instabank ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Instabank ASA.
Diversification Opportunities for Nordic Semiconductor and Instabank ASA
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nordic and Instabank is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Instabank ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instabank 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 Instabank ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instabank ASA has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Instabank ASA go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Instabank ASA
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 2.62 times more return on investment than Instabank ASA. However, Nordic Semiconductor is 2.62 times more volatile than Instabank ASA. It trades about 0.04 of its potential returns per unit of risk. Instabank ASA is currently generating about 0.04 per unit of risk. If you would invest 8,600 in Nordic Semiconductor ASA on September 3, 2024 and sell it today you would earn a total of 1,294 from holding Nordic Semiconductor ASA or generate 15.05% 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. Instabank ASA
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Instabank ASA |
Nordic Semiconductor and Instabank ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Instabank ASA
The main advantage of trading using opposite Nordic Semiconductor and Instabank ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Instabank ASA 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 Instabank ASA will offset losses from the drop in Instabank ASA's long position.| Nordic Semiconductor vs. Storebrand ASA | Nordic Semiconductor vs. DnB ASA | Nordic Semiconductor vs. Telenor ASA | Nordic Semiconductor vs. Kongsberg Gruppen ASA |
| Instabank ASA vs. SD Standard Drilling | Instabank ASA vs. Gaming Innovation Group | Instabank ASA vs. Eidesvik Offshore ASA | Instabank ASA vs. Norwegian Air Shuttle |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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