Correlation Between Nordic Mining and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Nordic Mining 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 Nordic Mining and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Mining ASA and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Nordic Mining 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 Nordic Mining with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Mining and Nordic Semiconductor.
Diversification Opportunities for Nordic Mining and Nordic Semiconductor
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nordic and Nordic is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Mining 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 Nordic Mining 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 Mining 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 Nordic Mining i.e., Nordic Mining and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Nordic Mining and Nordic Semiconductor
Assuming the 90 days trading horizon Nordic Mining ASA is expected to generate 0.68 times more return on investment than Nordic Semiconductor. However, Nordic Mining ASA is 1.48 times less risky than Nordic Semiconductor. It trades about 0.04 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 2,325 in Nordic Mining ASA on August 29, 2024 and sell it today you would earn a total of 224.00 from holding Nordic Mining ASA or generate 9.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nordic Mining ASA vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| Nordic Mining ASA |
| Nordic Semiconductor ASA |
Nordic Mining and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nordic Mining and Nordic Semiconductor
The main advantage of trading using opposite Nordic Mining and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Mining 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.| Nordic Mining vs. 5Th Planet Games | Nordic Mining vs. Napatech AS | Nordic Mining vs. Polaris Media | Nordic Mining vs. Xplora Technologies As |
| Nordic Semiconductor vs. REC Silicon ASA | Nordic Semiconductor vs. Aker Horizons AS | Nordic Semiconductor vs. Saga Pure 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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