Correlation Between Full Truck and Nordic Semiconductor

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

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

Diversification Opportunities for Full Truck and Nordic Semiconductor

0.77

Correlation Coefficient

Full Truck  Nordic Semiconductor

Poor diversification

The 3 months correlation between Full and Nordic is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Full Truck Alliance 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 Full Truck 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 Full Truck Alliance 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 Full Truck i.e., Full Truck and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between Full Truck and Nordic Semiconductor

Considering the 90-day investment horizon Full Truck is expected to generate 2.56 times less return on investment than Nordic Semiconductor. But when comparing it to its historical volatility, Full Truck Alliance is 1.64 times less risky than Nordic Semiconductor. It trades about 0.1 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  865.00  in Nordic Semiconductor ASA on December 24, 2024 and sell it today you would earn a total of  394.00  from holding Nordic Semiconductor ASA or generate 45.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.36%
Values	Daily Returns

Full Truck Alliance  vs.  Nordic Semiconductor ASA

Full Truck Alliance

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Full Truck Alliance are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, Full Truck displayed 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 Full Truck and Nordic Semiconductor

The main advantage of trading using opposite Full Truck and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Full Truck 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 Full Truck Alliance 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.