Correlation Between Nordic Semiconductor and Centaur Media

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

Diversification Opportunities for Nordic Semiconductor and Centaur Media

0.56

Correlation Coefficient

Nordic Semiconductor  Centaur Media

Very weak diversification

The 3 months correlation between Nordic and Centaur is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Centaur Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centaur Media 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 Centaur Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centaur Media has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Centaur Media go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and Centaur Media

Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 1.34 times more return on investment than Centaur Media. However, Nordic Semiconductor is 1.34 times more volatile than Centaur Media. It trades about 0.15 of its potential returns per unit of risk. Centaur Media is currently generating about 0.08 per unit of risk. If you would invest  9,929  in Nordic Semiconductor ASA on December 24, 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	Weak
Accuracy	100.0%
Values	Daily Returns

Nordic Semiconductor ASA  vs.  Centaur Media

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 unsteady basic indicators, Nordic Semiconductor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Centaur Media

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Centaur Media are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Centaur Media exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordic Semiconductor and Centaur Media

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

The idea behind Nordic Semiconductor ASA and Centaur Media 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.