Correlation Between Joint Stock and Nordic Semiconductor

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

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

Diversification Opportunities for Joint Stock and Nordic Semiconductor

0.18

Correlation Coefficient

Joint Stock  Nordic Semiconductor

Average diversification

The 3 months correlation between Joint and Nordic is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock 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 Joint Stock 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 Joint Stock 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 Joint Stock i.e., Joint Stock and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between Joint Stock and Nordic Semiconductor

Given the investment horizon of 90 days Joint Stock is expected to generate 0.84 times more return on investment than Nordic Semiconductor. However, Joint Stock is 1.19 times less risky than Nordic Semiconductor. It trades about -0.07 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.07 per unit of risk. If you would invest  12,349  in Joint Stock on October 13, 2024 and sell it today you would lose (3,186) from holding Joint Stock or give up 25.8% of portfolio value over 90 days.

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

Joint Stock  vs.  Nordic Semiconductor ASA

Joint Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Joint Stock and Nordic Semiconductor

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