Correlation Between PICC Property and Nordic Semiconductor

Can any of the company-specific risk be diversified away by investing in both PICC Property and Nordic Semiconductor 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 PICC Property and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PICC Property and and Nordic Semiconductor ASA, you can compare the effects of market volatilities on PICC Property and Nordic Semiconductor 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 PICC Property with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICC Property and Nordic Semiconductor.

Diversification Opportunities for PICC Property and Nordic Semiconductor

0.68

Correlation Coefficient

PICC Property  Nordic Semiconductor

Poor diversification

The 3 months correlation between PICC and Nordic is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PICC Property and and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA and PICC Property 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 PICC Property and are associated (or correlated) with Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of PICC Property i.e., PICC Property and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between PICC Property and Nordic Semiconductor

Assuming the 90 days horizon PICC Property is expected to generate 2.35 times less return on investment than Nordic Semiconductor. But when comparing it to its historical volatility, PICC Property and is 1.64 times less risky than Nordic Semiconductor. It trades about 0.11 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  847.00  in Nordic Semiconductor ASA on December 27, 2024 and sell it today you would earn a total of  329.00  from holding Nordic Semiconductor ASA or generate 38.84% return on investment over 90 days.

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

PICC Property and  vs.  Nordic Semiconductor ASA

PICC Property

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PICC Property and are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PICC Property reported solid returns over the last few months and may actually be approaching a breakup point.

Nordic Semiconductor ASA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Nordic Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PICC Property and Nordic Semiconductor

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

The idea behind PICC Property and and Nordic Semiconductor ASA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.