Correlation Between HF SINCLAIR and Nordic Semiconductor

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

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

Diversification Opportunities for HF SINCLAIR and Nordic Semiconductor

-0.02

Correlation Coefficient

HF SINCLAIR  Nordic Semiconductor

Good diversification

The 3 months correlation between HL80 and Nordic is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding HF SINCLAIR P 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 HF SINCLAIR 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 HF SINCLAIR P 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 HF SINCLAIR i.e., HF SINCLAIR and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between HF SINCLAIR and Nordic Semiconductor

Assuming the 90 days trading horizon HF SINCLAIR P is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, HF SINCLAIR P is 1.44 times less risky than Nordic Semiconductor. The stock trades about -0.02 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  847.00  in Nordic Semiconductor ASA on December 26, 2024 and sell it today you would earn a total of  335.00  from holding Nordic Semiconductor ASA or generate 39.55% return on investment over 90 days.

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

HF SINCLAIR P  vs.  Nordic Semiconductor ASA

HF SINCLAIR P

Risk-Adjusted Performance

Very Weak

Over the last 90 days HF SINCLAIR P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, HF SINCLAIR is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 HF SINCLAIR and Nordic Semiconductor

The main advantage of trading using opposite HF SINCLAIR and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF SINCLAIR 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 HF SINCLAIR P 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.