Correlation Between Intchains Group and Nordic Semiconductor

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

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

Diversification Opportunities for Intchains Group and Nordic Semiconductor

-0.26

Correlation Coefficient

Intchains Group  Nordic Semiconductor

Very good diversification

The 3 months correlation between Intchains and Nordic is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Intchains Group Limited 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 Intchains Group 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 Intchains Group Limited 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 Intchains Group i.e., Intchains Group and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between Intchains Group and Nordic Semiconductor

Considering the 90-day investment horizon Intchains Group Limited is expected to generate 1.93 times more return on investment than Nordic Semiconductor. However, Intchains Group is 1.93 times more volatile than Nordic Semiconductor ASA. It trades about 0.02 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.01 per unit of risk. If you would invest  800.00  in Intchains Group Limited on October 14, 2024 and sell it today you would lose (344.00) from holding Intchains Group Limited or give up 43.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.54%
Values	Daily Returns

Intchains Group Limited  vs.  Nordic Semiconductor ASA

Intchains Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intchains Group Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain fundamental indicators, Intchains Group reported solid returns over the last few months and may actually be approaching a breakup point.

Nordic Semiconductor ASA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nordic Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Intchains Group and Nordic Semiconductor

The main advantage of trading using opposite Intchains Group and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intchains Group 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 Intchains Group Limited 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.