Correlation Between Nordic Semiconductor and Kitron ASA
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Kitron 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 Kitron 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 Kitron ASA, you can compare the effects of market volatilities on Nordic Semiconductor and Kitron 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 Kitron ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Kitron ASA.
Diversification Opportunities for Nordic Semiconductor and Kitron ASA
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nordic and Kitron is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Kitron ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kitron 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 Kitron ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kitron ASA has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Kitron ASA go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Kitron ASA
Assuming the 90 days trading horizon Nordic Semiconductor is expected to generate 7.35 times less return on investment than Kitron ASA. In addition to that, Nordic Semiconductor is 1.53 times more volatile than Kitron ASA. It trades about 0.0 of its total potential returns per unit of risk. Kitron ASA is currently generating about 0.04 per unit of volatility. If you would invest 2,694 in Kitron ASA on November 2, 2024 and sell it today you would earn a total of 1,186 from holding Kitron ASA or generate 44.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Kitron ASA
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Kitron ASA |
Nordic Semiconductor and Kitron ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Kitron ASA
The main advantage of trading using opposite Nordic Semiconductor and Kitron ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Kitron 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 Kitron ASA will offset losses from the drop in Kitron 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 |
| Kitron ASA vs. Europris ASA | Kitron ASA vs. Kongsberg Gruppen ASA | Kitron ASA vs. Nordic Semiconductor ASA | Kitron ASA vs. Storebrand 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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