Correlation Between Nordic Semiconductor and Gaming

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Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and Gaming 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 Nordic Semiconductor and Gaming into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic Semiconductor ASA and Gaming and Leisure, you can compare the effects of market volatilities on Nordic Semiconductor and Gaming 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 Nordic Semiconductor with a short position of Gaming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and Gaming.

Diversification Opportunities for Nordic Semiconductor and Gaming

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nordic and Gaming is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Gaming and Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaming and Leisure and Nordic Semiconductor 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 Nordic Semiconductor ASA are associated (or correlated) with Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaming and Leisure has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Gaming go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and Gaming

Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 1.52 times more return on investment than Gaming. However, Nordic Semiconductor is 1.52 times more volatile than Gaming and Leisure. It trades about 0.15 of its potential returns per unit of risk. Gaming and Leisure is currently generating about 0.03 per unit of risk. If you would invest  836.00  in Nordic Semiconductor ASA on October 23, 2024 and sell it today you would earn a total of  149.00  from holding Nordic Semiconductor ASA or generate 17.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Nordic Semiconductor ASA  vs.  Gaming and Leisure

 Performance 
       Timeline  
Nordic Semiconductor ASA 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nordic Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.
Gaming and Leisure 

Risk-Adjusted Performance

2 of 100

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

Nordic Semiconductor and Gaming Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nordic Semiconductor and Gaming

The main advantage of trading using opposite Nordic Semiconductor and Gaming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Gaming 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 Gaming will offset losses from the drop in Gaming's long position.
The idea behind Nordic Semiconductor ASA and Gaming and Leisure 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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