Correlation Between Nordic Semiconductor and EPSILON HEALTHCARE

Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and EPSILON HEALTHCARE 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 EPSILON HEALTHCARE 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 EPSILON HEALTHCARE LTD, you can compare the effects of market volatilities on Nordic Semiconductor and EPSILON HEALTHCARE 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 EPSILON HEALTHCARE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and EPSILON HEALTHCARE.

Diversification Opportunities for Nordic Semiconductor and EPSILON HEALTHCARE

0.0

Correlation Coefficient

Nordic Semiconductor  EPSILON HEALTHCARE

Pay attention - limited upside

The 3 months correlation between Nordic and EPSILON is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and EPSILON HEALTHCARE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EPSILON HEALTHCARE LTD 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 EPSILON HEALTHCARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EPSILON HEALTHCARE LTD has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and EPSILON HEALTHCARE go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and EPSILON HEALTHCARE

Assuming the 90 days horizon Nordic Semiconductor ASA is expected to under-perform the EPSILON HEALTHCARE. But the stock apears to be less risky and, when comparing its historical volatility, Nordic Semiconductor ASA is 3.74 times less risky than EPSILON HEALTHCARE. The stock trades about -0.01 of its potential returns per unit of risk. The EPSILON HEALTHCARE LTD is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1.20  in EPSILON HEALTHCARE LTD on October 15, 2024 and sell it today you would lose (0.45) from holding EPSILON HEALTHCARE LTD or give up 37.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Nordic Semiconductor ASA  vs.  EPSILON HEALTHCARE LTD

Nordic Semiconductor ASA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nordic Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

EPSILON HEALTHCARE LTD

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nordic Semiconductor and EPSILON HEALTHCARE

The main advantage of trading using opposite Nordic Semiconductor and EPSILON HEALTHCARE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, EPSILON HEALTHCARE 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 EPSILON HEALTHCARE will offset losses from the drop in EPSILON HEALTHCARE's long position.

The idea behind Nordic Semiconductor ASA and EPSILON HEALTHCARE LTD 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.