Correlation Between Computer and Nordic Semiconductor

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

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

Diversification Opportunities for Computer and Nordic Semiconductor

0.77

Correlation Coefficient

Computer  Nordic Semiconductor

Poor diversification

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

Pair Corralation between Computer and Nordic Semiconductor

Assuming the 90 days horizon Computer And Technologies is expected to generate 1.17 times more return on investment than Nordic Semiconductor. However, Computer is 1.17 times more volatile than Nordic Semiconductor ASA. It trades about 0.0 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.06 per unit of risk. If you would invest  17.00  in Computer And Technologies on February 15, 2025 and sell it today you would lose (1.00) from holding Computer And Technologies or give up 5.88% of portfolio value over 90 days.

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

Computer And Technologies  vs.  Nordic Semiconductor ASA

Computer And Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Computer And Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Computer is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nordic Semiconductor ASA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordic Semiconductor ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Pair Trading with Computer and Nordic Semiconductor

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