Correlation Between Vishay Intertechnology and Nordic Semiconductor

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

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

Diversification Opportunities for Vishay Intertechnology and Nordic Semiconductor

-0.25

Correlation Coefficient

Vishay Intertechnology  Nordic Semiconductor

Very good diversification

The 3 months correlation between Vishay and Nordic is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Vishay Intertechnology 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 Vishay Intertechnology 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 Vishay Intertechnology 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 Vishay Intertechnology i.e., Vishay Intertechnology and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between Vishay Intertechnology and Nordic Semiconductor

Considering the 90-day investment horizon Vishay Intertechnology is expected to under-perform the Nordic Semiconductor. In addition to that, Vishay Intertechnology is 1.53 times more volatile than Nordic Semiconductor ASA. It trades about -0.34 of its total potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.29 per unit of volatility. If you would invest  911.00  in Nordic Semiconductor ASA on October 5, 2024 and sell it today you would lose (56.00) from holding Nordic Semiconductor ASA or give up 6.15% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Vishay Intertechnology  vs.  Nordic Semiconductor ASA

Vishay Intertechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vishay Intertechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Vishay Intertechnology is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

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. In spite of fairly strong fundamental indicators, Nordic Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vishay Intertechnology and Nordic Semiconductor

The main advantage of trading using opposite Vishay Intertechnology and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vishay Intertechnology 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 Vishay Intertechnology 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.

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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.