Correlation Between Nordic Semiconductor and Aker Carbon

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

Diversification Opportunities for Nordic Semiconductor and Aker Carbon

0.02

Correlation Coefficient

Nordic Semiconductor  Aker Carbon

Significant diversification

The 3 months correlation between Nordic and Aker is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Aker Carbon Capture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aker Carbon Capture 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 Aker Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aker Carbon Capture has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Aker Carbon go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and Aker Carbon

Assuming the 90 days trading horizon Nordic Semiconductor ASA is expected to generate 0.43 times more return on investment than Aker Carbon. However, Nordic Semiconductor ASA is 2.3 times less risky than Aker Carbon. It trades about 0.13 of its potential returns per unit of risk. Aker Carbon Capture is currently generating about -0.06 per unit of risk. If you would invest  10,045  in Nordic Semiconductor ASA on December 29, 2024 and sell it today you would earn a total of  2,755  from holding Nordic Semiconductor ASA or generate 27.43% return on investment over 90 days.

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

Nordic Semiconductor ASA  vs.  Aker Carbon Capture

Nordic Semiconductor ASA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental indicators, Nordic Semiconductor disclosed solid returns over the last few months and may actually be approaching a breakup point.

Aker Carbon Capture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aker Carbon Capture has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Nordic Semiconductor and Aker Carbon

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

The idea behind Nordic Semiconductor ASA and Aker Carbon Capture 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.