Correlation Between Nordic Semiconductor and Media

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

Diversification Opportunities for Nordic Semiconductor and Media

-0.01

Correlation Coefficient

Nordic Semiconductor  Media

Good diversification

The 3 months correlation between Nordic and Media is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Media and Games in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media and Games 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 Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media and Games has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Media go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and Media

Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 0.6 times more return on investment than Media. However, Nordic Semiconductor ASA is 1.68 times less risky than Media. It trades about 0.03 of its potential returns per unit of risk. Media and Games is currently generating about -0.15 per unit of risk. If you would invest  842.00  in Nordic Semiconductor ASA on September 29, 2024 and sell it today you would earn a total of  5.00  from holding Nordic Semiconductor ASA or generate 0.59% 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.  Media and Games

Nordic Semiconductor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Semiconductor ASA has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Media and Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media and Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Nordic Semiconductor and Media

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

The idea behind Nordic Semiconductor ASA and Media and Games 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.