Correlation Between NORDIC HALIBUT and Broadcom

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

By analyzing existing cross correlation between NORDIC HALIBUT AS and Broadcom, you can compare the effects of market volatilities on NORDIC HALIBUT and Broadcom 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 HALIBUT with a short position of Broadcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORDIC HALIBUT and Broadcom.

Diversification Opportunities for NORDIC HALIBUT and Broadcom

-0.15

Correlation Coefficient

NORDIC HALIBUT  Broadcom

Good diversification

The 3 months correlation between NORDIC and Broadcom is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding NORDIC HALIBUT AS and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom and NORDIC HALIBUT 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 HALIBUT AS are associated (or correlated) with Broadcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadcom has no effect on the direction of NORDIC HALIBUT i.e., NORDIC HALIBUT and Broadcom go up and down completely randomly.

Pair Corralation between NORDIC HALIBUT and Broadcom

Assuming the 90 days horizon NORDIC HALIBUT AS is expected to generate 0.51 times more return on investment than Broadcom. However, NORDIC HALIBUT AS is 1.96 times less risky than Broadcom. It trades about 0.01 of its potential returns per unit of risk. Broadcom is currently generating about -0.14 per unit of risk. If you would invest  170.00  in NORDIC HALIBUT AS on December 29, 2024 and sell it today you would earn a total of  1.00  from holding NORDIC HALIBUT AS or generate 0.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NORDIC HALIBUT AS  vs.  Broadcom

NORDIC HALIBUT AS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NORDIC HALIBUT AS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NORDIC HALIBUT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Broadcom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Broadcom has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NORDIC HALIBUT and Broadcom

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

The idea behind NORDIC HALIBUT AS and Broadcom 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.