Correlation Between Montana Technologies and Nordic Semiconductor

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

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

Diversification Opportunities for Montana Technologies and Nordic Semiconductor

-0.27

Correlation Coefficient

Montana Technologies  Nordic Semiconductor

Very good diversification

The 3 months correlation between Montana and Nordic is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Montana Technologies 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 Montana Technologies 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 Montana Technologies 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 Montana Technologies i.e., Montana Technologies and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between Montana Technologies and Nordic Semiconductor

Given the investment horizon of 90 days Montana Technologies is expected to generate 8.28 times more return on investment than Nordic Semiconductor. However, Montana Technologies is 8.28 times more volatile than Nordic Semiconductor ASA. It trades about 0.05 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.21 per unit of risk. If you would invest  828.00  in Montana Technologies on October 6, 2024 and sell it today you would earn a total of  15.00  from holding Montana Technologies or generate 1.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Montana Technologies  vs.  Nordic Semiconductor ASA

Montana Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Montana Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Montana Technologies revealed 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 fairly strong fundamental indicators, Nordic Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Montana Technologies and Nordic Semiconductor

The main advantage of trading using opposite Montana Technologies and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montana Technologies 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 Montana Technologies 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.