Correlation Between Nordic Semiconductor and CVR Energy

Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and CVR Energy 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 CVR Energy 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 CVR Energy, you can compare the effects of market volatilities on Nordic Semiconductor and CVR Energy 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 CVR Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and CVR Energy.

Diversification Opportunities for Nordic Semiconductor and CVR Energy

0.19

Correlation Coefficient

Nordic Semiconductor  CVR Energy

Average diversification

The 3 months correlation between Nordic and CVR is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and CVR Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVR Energy 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 CVR Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVR Energy has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and CVR Energy go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and CVR Energy

Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 1.26 times more return on investment than CVR Energy. However, Nordic Semiconductor is 1.26 times more volatile than CVR Energy. It trades about 0.15 of its potential returns per unit of risk. CVR Energy is currently generating about 0.13 per unit of risk. If you would invest  9,929  in Nordic Semiconductor ASA on December 22, 2024 and sell it today you would earn a total of  3,551  from holding Nordic Semiconductor ASA or generate 35.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Nordic Semiconductor ASA  vs.  CVR Energy

Nordic Semiconductor ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Nordic Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

CVR Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CVR Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordic Semiconductor and CVR Energy

The main advantage of trading using opposite Nordic Semiconductor and CVR Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, CVR Energy 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 CVR Energy will offset losses from the drop in CVR Energy's long position.

The idea behind Nordic Semiconductor ASA and CVR Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.