Correlation Between CLEAN ENERGY and Nordic Semiconductor

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

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

Diversification Opportunities for CLEAN ENERGY and Nordic Semiconductor

0.16

Correlation Coefficient

CLEAN ENERGY  Nordic Semiconductor

Average diversification

The 3 months correlation between CLEAN and Nordic is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding CLEAN ENERGY FUELS 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 CLEAN ENERGY 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 CLEAN ENERGY FUELS 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 CLEAN ENERGY i.e., CLEAN ENERGY and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between CLEAN ENERGY and Nordic Semiconductor

Assuming the 90 days trading horizon CLEAN ENERGY FUELS is expected to under-perform the Nordic Semiconductor. But the stock apears to be less risky and, when comparing its historical volatility, CLEAN ENERGY FUELS is 1.11 times less risky than Nordic Semiconductor. The stock trades about -0.01 of its potential returns per unit of risk. The Nordic Semiconductor ASA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,451  in Nordic Semiconductor ASA on October 11, 2024 and sell it today you would lose (564.00) from holding Nordic Semiconductor ASA or give up 38.87% of portfolio value over 90 days.

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

CLEAN ENERGY FUELS  vs.  Nordic Semiconductor ASA

CLEAN ENERGY FUELS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CLEAN ENERGY FUELS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, CLEAN ENERGY exhibited solid returns over the last few months and may actually be approaching a breakup point.

Nordic Semiconductor ASA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Nordic Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CLEAN ENERGY and Nordic Semiconductor

The main advantage of trading using opposite CLEAN ENERGY and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLEAN ENERGY 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 CLEAN ENERGY FUELS 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.