Correlation Between FAIR ISAAC and Nordic Semiconductor

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

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

Diversification Opportunities for FAIR ISAAC and Nordic Semiconductor

-0.74

Correlation Coefficient

FAIR ISAAC  Nordic Semiconductor

Pay attention - limited upside

The 3 months correlation between FAIR and Nordic is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding FAIR ISAAC 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 FAIR ISAAC 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 FAIR ISAAC 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 FAIR ISAAC i.e., FAIR ISAAC and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between FAIR ISAAC and Nordic Semiconductor

Assuming the 90 days trading horizon FAIR ISAAC is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, FAIR ISAAC is 1.32 times less risky than Nordic Semiconductor. The stock trades about -0.07 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  825.00  in Nordic Semiconductor ASA on December 21, 2024 and sell it today you would earn a total of  312.00  from holding Nordic Semiconductor ASA or generate 37.82% return on investment over 90 days.

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

FAIR ISAAC  vs.  Nordic Semiconductor ASA

FAIR ISAAC

Risk-Adjusted Performance

Very Weak

Over the last 90 days FAIR ISAAC 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 forward indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nordic Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FAIR ISAAC and Nordic Semiconductor

The main advantage of trading using opposite FAIR ISAAC and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAIR ISAAC 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 FAIR ISAAC 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.