Correlation Between Peel Mining and Nordic Semiconductor

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

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

Diversification Opportunities for Peel Mining and Nordic Semiconductor

-0.57

Correlation Coefficient

Peel Mining  Nordic Semiconductor

Excellent diversification

The 3 months correlation between Peel and Nordic is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Peel Mining Limited 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 Peel Mining 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 Peel Mining Limited 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 Peel Mining i.e., Peel Mining and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between Peel Mining and Nordic Semiconductor

Assuming the 90 days horizon Peel Mining Limited is expected to under-perform the Nordic Semiconductor. In addition to that, Peel Mining is 1.04 times more volatile than Nordic Semiconductor ASA. It trades about -0.03 of its total potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.19 per unit of volatility. If you would invest  843.00  in Nordic Semiconductor ASA on November 29, 2024 and sell it today you would earn a total of  402.00  from holding Nordic Semiconductor ASA or generate 47.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Peel Mining Limited  vs.  Nordic Semiconductor ASA

Peel Mining Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Peel Mining Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nordic Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Peel Mining and Nordic Semiconductor

The main advantage of trading using opposite Peel Mining and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peel Mining 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 Peel Mining Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.