Correlation Between Bank of China and Nordic Semiconductor
Can any of the company-specific risk be diversified away by investing in both Bank of China 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 Bank of China and Nordic Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of China and Nordic Semiconductor ASA, you can compare the effects of market volatilities on Bank of China 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 Bank of China with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of China and Nordic Semiconductor.
Diversification Opportunities for Bank of China and Nordic Semiconductor
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Nordic is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bank of China 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 Bank of China 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 Bank of China 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 Bank of China i.e., Bank of China and Nordic Semiconductor go up and down completely randomly.
Pair Corralation between Bank of China and Nordic Semiconductor
Assuming the 90 days horizon Bank of China is expected to generate 1.11 times more return on investment than Nordic Semiconductor. However, Bank of China is 1.11 times more volatile than Nordic Semiconductor ASA. It trades about 0.17 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.15 per unit of risk. If you would invest 37.00 in Bank of China on December 28, 2024 and sell it today you would earn a total of 18.00 from holding Bank of China or generate 48.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Bank of China vs. Nordic Semiconductor ASA
Performance |
Timeline |
Bank of China |
Nordic Semiconductor ASA |
Bank of China and Nordic Semiconductor Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank of China and Nordic Semiconductor
The main advantage of trading using opposite Bank of China and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of China 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.Bank of China vs. KINGBOARD CHEMICAL | Bank of China vs. NISSAN CHEMICAL IND | Bank of China vs. IBU tec advanced materials | Bank of China vs. Rayonier Advanced Materials |
Nordic Semiconductor vs. ALBIS LEASING AG | Nordic Semiconductor vs. MOBILE FACTORY INC | Nordic Semiconductor vs. Geely Automobile Holdings | Nordic Semiconductor vs. Charter Communications |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
Bonds Directory Find actively traded corporate debentures issued by US companies | |
Money Managers Screen money managers from public funds and ETFs managed around the world | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |