Correlation Between REC Silicon and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both REC Silicon 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 REC Silicon and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REC Silicon ASA and Nordic Semiconductor ASA, you can compare the effects of market volatilities on REC Silicon 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 REC Silicon with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of REC Silicon and Nordic Semiconductor.
Diversification Opportunities for REC Silicon and Nordic Semiconductor
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between REC and Nordic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding REC Silicon 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 REC Silicon 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 REC Silicon 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 REC Silicon i.e., REC Silicon and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between REC Silicon and Nordic Semiconductor
Assuming the 90 days trading horizon REC Silicon ASA is expected to under-perform the Nordic Semiconductor. In addition to that, REC Silicon is 1.15 times more volatile than Nordic Semiconductor ASA. It trades about -0.06 of its total potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.0 per unit of volatility. If you would invest 13,300 in Nordic Semiconductor ASA on September 1, 2024 and sell it today you would lose (3,406) from holding Nordic Semiconductor ASA or give up 25.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REC Silicon ASA vs. Nordic Semiconductor ASA
Performance |
| Timeline |
| REC Silicon ASA |
| Nordic Semiconductor ASA |
REC Silicon and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REC Silicon and Nordic Semiconductor
The main advantage of trading using opposite REC Silicon and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REC Silicon 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.| REC Silicon vs. Aker Horizons AS | REC Silicon vs. MPC Container Ships | REC Silicon vs. Aker Carbon Capture | REC Silicon vs. Nordic Semiconductor ASA |
| Nordic Semiconductor vs. Storebrand ASA | Nordic Semiconductor vs. DnB ASA | Nordic Semiconductor vs. Telenor ASA | Nordic Semiconductor vs. Kongsberg Gruppen 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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