Correlation Between Norsk Hydro and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Norsk Hydro and Nordic Semiconductor 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 Norsk Hydro and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norsk Hydro ASA and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Norsk Hydro and Nordic Semiconductor 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 Norsk Hydro with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norsk Hydro and Nordic Semiconductor.
Diversification Opportunities for Norsk Hydro and Nordic Semiconductor
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Norsk and Nordic is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Norsk Hydro ASA and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA and Norsk Hydro 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 Norsk Hydro ASA are associated (or correlated) with Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of Norsk Hydro i.e., Norsk Hydro and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Norsk Hydro and Nordic Semiconductor
Assuming the 90 days trading horizon Norsk Hydro ASA is expected to generate 0.72 times more return on investment than Nordic Semiconductor. However, Norsk Hydro ASA is 1.4 times less risky than Nordic Semiconductor. It trades about 0.0 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.06 per unit of risk. If you would invest 575.00 in Norsk Hydro ASA on September 19, 2024 and sell it today you would lose (26.00) from holding Norsk Hydro ASA or give up 4.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Norsk Hydro ASA vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Norsk Hydro ASA |
| Nordic Semiconductor ASA |
Norsk Hydro and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Norsk Hydro and Nordic Semiconductor
The main advantage of trading using opposite Norsk Hydro and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norsk Hydro position performs unexpectedly, Nordic Semiconductor 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 Semiconductor will offset losses from the drop in Nordic Semiconductor's long position.| Norsk Hydro vs. T MOBILE US | Norsk Hydro vs. PT Ace Hardware | Norsk Hydro vs. Align Technology | Norsk Hydro vs. SMA Solar Technology |
| Nordic Semiconductor vs. Taiwan Semiconductor Manufacturing | Nordic Semiconductor vs. Broadcom | Nordic Semiconductor vs. Superior Plus Corp | Nordic Semiconductor vs. Norsk Hydro 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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