Correlation Between MT Bank and Nordic Semiconductor

Can any of the company-specific risk be diversified away by investing in both MT Bank 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 MT Bank and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MT Bank Corp and Nordic Semiconductor ASA, you can compare the effects of market volatilities on MT Bank 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 MT Bank with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Nordic Semiconductor.

Diversification Opportunities for MT Bank and Nordic Semiconductor

-0.53

Correlation Coefficient

MT Bank  Nordic Semiconductor

Excellent diversification

The 3 months correlation between 0JW2 and Nordic is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp 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 MT Bank 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 MT Bank Corp 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 MT Bank i.e., MT Bank and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between MT Bank and Nordic Semiconductor

Assuming the 90 days trading horizon MT Bank Corp is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, MT Bank Corp is 1.42 times less risky than Nordic Semiconductor. The stock trades about -0.25 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,883  in Nordic Semiconductor ASA on September 16, 2024 and sell it today you would earn a total of  134.00  from holding Nordic Semiconductor ASA or generate 1.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

MT Bank Corp  vs.  Nordic Semiconductor ASA

MT Bank Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MT Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nordic Semiconductor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Semiconductor ASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with MT Bank and Nordic Semiconductor

The main advantage of trading using opposite MT Bank and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank 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.

The idea behind MT Bank Corp and Nordic Semiconductor ASA 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.