Correlation Between Nordic Semiconductor and T-Mobile

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

Diversification Opportunities for Nordic Semiconductor and T-Mobile

-0.29

Correlation Coefficient

Nordic Semiconductor  T-Mobile

Very good diversification

The 3 months correlation between Nordic and T-Mobile is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and T Mobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on T Mobile 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 T-Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of T Mobile has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and T-Mobile go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and T-Mobile

Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 1.08 times more return on investment than T-Mobile. However, Nordic Semiconductor is 1.08 times more volatile than T Mobile. It trades about 0.15 of its potential returns per unit of risk. T Mobile is currently generating about 0.05 per unit of risk. If you would invest  831.00  in Nordic Semiconductor ASA on October 22, 2024 and sell it today you would earn a total of  149.00  from holding Nordic Semiconductor ASA or generate 17.93% 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.  T Mobile

Nordic Semiconductor ASA

Risk-Adjusted Performance

11 of 100

OK

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 fragile basic indicators, Nordic Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.

T Mobile

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in T Mobile are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, T-Mobile 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 T-Mobile

The main advantage of trading using opposite Nordic Semiconductor and T-Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, T-Mobile 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 T-Mobile will offset losses from the drop in T-Mobile's long position.

The idea behind Nordic Semiconductor ASA and T Mobile 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.