Correlation Between Storebrand ASA and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Storebrand ASA 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 Storebrand ASA and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Storebrand ASA and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Storebrand ASA 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 Storebrand ASA with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Storebrand ASA and Nordic Semiconductor.
Diversification Opportunities for Storebrand ASA and Nordic Semiconductor
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Storebrand and Nordic is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Storebrand 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 Storebrand ASA 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 Storebrand 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 Storebrand ASA i.e., Storebrand ASA and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Storebrand ASA and Nordic Semiconductor
Assuming the 90 days trading horizon Storebrand ASA is expected to generate 0.68 times more return on investment than Nordic Semiconductor. However, Storebrand ASA is 1.46 times less risky than Nordic Semiconductor. It trades about -0.09 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.13 per unit of risk. If you would invest 12,700 in Storebrand ASA on August 25, 2024 and sell it today you would lose (370.00) from holding Storebrand ASA or give up 2.91% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Storebrand ASA vs. Nordic Semiconductor ASA
Performance |
Timeline |
Storebrand ASA |
Nordic Semiconductor ASA |
Storebrand ASA and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Storebrand ASA and Nordic Semiconductor
The main advantage of trading using opposite Storebrand ASA and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Storebrand ASA 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.Storebrand ASA vs. DnB ASA | Storebrand ASA vs. Gjensidige Forsikring ASA | Storebrand ASA vs. Orkla ASA | Storebrand ASA vs. Telenor 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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