Correlation Between Nordic Semiconductor and Apple

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

Diversification Opportunities for Nordic Semiconductor and Apple

-0.07

Correlation Coefficient

Nordic Semiconductor  Apple

Good diversification

The 3 months correlation between Nordic and Apple is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Apple go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and Apple

Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 1.59 times more return on investment than Apple. However, Nordic Semiconductor is 1.59 times more volatile than Apple Inc. It trades about 0.08 of its potential returns per unit of risk. Apple Inc is currently generating about 0.08 per unit of risk. If you would invest  858.00  in Nordic Semiconductor ASA on October 9, 2024 and sell it today you would earn a total of  20.00  from holding Nordic Semiconductor ASA or generate 2.33% return on investment over 90 days.

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

Nordic Semiconductor ASA  vs.  Apple Inc

Nordic Semiconductor ASA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nordic Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Apple Inc

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental indicators, Apple exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordic Semiconductor and Apple

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

The idea behind Nordic Semiconductor ASA and Apple Inc 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.