Correlation Between De Grey and Nordic Semiconductor

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

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

Diversification Opportunities for De Grey and Nordic Semiconductor

0.44

Correlation Coefficient

De Grey  Nordic Semiconductor

Very weak diversification

The 3 months correlation between DGD and Nordic is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding De Grey Mining 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 De Grey 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 De Grey Mining 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 De Grey i.e., De Grey and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between De Grey and Nordic Semiconductor

Assuming the 90 days trading horizon De Grey is expected to generate 1.55 times less return on investment than Nordic Semiconductor. In addition to that, De Grey is 1.26 times more volatile than Nordic Semiconductor ASA. It trades about 0.42 of its total potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.82 per unit of volatility. If you would invest  847.00  in Nordic Semiconductor ASA on October 26, 2024 and sell it today you would earn a total of  171.00  from holding Nordic Semiconductor ASA or generate 20.19% return on investment over 90 days.

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

De Grey Mining  vs.  Nordic Semiconductor ASA

De Grey Mining

Risk-Adjusted Performance

10 of 100

OK

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

Nordic Semiconductor ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nordic Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with De Grey and Nordic Semiconductor

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

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.