Correlation Between Nordic Semiconductor and Nordic Mining
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Nordic Mining 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 Nordic Mining 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 Nordic Mining ASA, you can compare the effects of market volatilities on Nordic Semiconductor and Nordic Mining 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 Nordic Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Nordic Mining.
Diversification Opportunities for Nordic Semiconductor and Nordic Mining
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nordic and Nordic is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Nordic Mining ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Mining 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 Nordic Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Mining ASA has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Nordic Mining go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Nordic Mining
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to under-perform the Nordic Mining. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Semiconductor ASA is 1.1 times less risky than Nordic Mining. The stock trades about -0.23 of its potential returns per unit of risk. The Nordic Mining ASA is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,590 in Nordic Mining ASA on September 1, 2024 and sell it today you would lose (49.00) from holding Nordic Mining ASA or give up 1.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Semiconductor ASA vs. Nordic Mining ASA
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Nordic Mining ASA |
Nordic Semiconductor and Nordic Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Nordic Mining
The main advantage of trading using opposite Nordic Semiconductor and Nordic Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Nordic Mining 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 Mining will offset losses from the drop in Nordic Mining's long position.| Nordic Semiconductor vs. Storebrand ASA | Nordic Semiconductor vs. DnB ASA | Nordic Semiconductor vs. Telenor ASA | Nordic Semiconductor vs. Kongsberg Gruppen ASA |
| Nordic Mining vs. SpareBank 1 stlandet | Nordic Mining vs. Odfjell Drilling | Nordic Mining vs. BW Offshore | Nordic Mining vs. Dolphin Drilling AS |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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