Correlation Between Nordic Semiconductor and Odfjell Technology
Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Odfjell Technology 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 Odfjell Technology 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 Odfjell Technology, you can compare the effects of market volatilities on Nordic Semiconductor and Odfjell Technology 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 Odfjell Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Odfjell Technology.
Diversification Opportunities for Nordic Semiconductor and Odfjell Technology
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nordic and Odfjell is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Odfjell Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Odfjell Technology 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 Odfjell Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Odfjell Technology has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Odfjell Technology go up and down completely randomly.
Pair Corralation between Nordic Semiconductor and Odfjell Technology
Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 1.54 times more return on investment than Odfjell Technology. However, Nordic Semiconductor is 1.54 times more volatile than Odfjell Technology. It trades about 0.22 of its potential returns per unit of risk. Odfjell Technology is currently generating about 0.09 per unit of risk. If you would invest 9,880 in Nordic Semiconductor ASA on November 27, 2024 and sell it today you would earn a total of 5,020 from holding Nordic Semiconductor ASA or generate 50.81% 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. Odfjell Technology
Performance |
| Timeline |
| Nordic Semiconductor ASA |
| Odfjell Technology |
Nordic Semiconductor and Odfjell Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Semiconductor and Odfjell Technology
The main advantage of trading using opposite Nordic Semiconductor and Odfjell Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Odfjell Technology 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 Odfjell Technology will offset losses from the drop in Odfjell Technology's long position.| Nordic Semiconductor vs. Storebrand ASA | Nordic Semiconductor vs. DnB ASA | Nordic Semiconductor vs. Telenor ASA | Nordic Semiconductor vs. Kongsberg Gruppen ASA |
| Odfjell Technology vs. Pareto Bank ASA | Odfjell Technology vs. Austevoll Seafood ASA | Odfjell Technology vs. Kraft Bank Asa | Odfjell Technology vs. Sogn Sparebank |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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