Correlation Between Nordic Semiconductor and Samsung Electronics

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

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

Diversification Opportunities for Nordic Semiconductor and Samsung Electronics

0.76

Correlation Coefficient

Nordic Semiconductor  Samsung Electronics

Poor diversification

The 3 months correlation between Nordic and Samsung is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Nordic Semiconductor 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 Nordic Semiconductor ASA are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and Samsung Electronics go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and Samsung Electronics

Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 2.03 times more return on investment than Samsung Electronics. However, Nordic Semiconductor is 2.03 times more volatile than Samsung Electronics Co. It trades about 0.23 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.16 per unit of risk. If you would invest  920.00  in Nordic Semiconductor ASA on February 18, 2025 and sell it today you would earn a total of  137.00  from holding Nordic Semiconductor ASA or generate 14.89% return on investment over 90 days.

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

Nordic Semiconductor ASA  vs.  Samsung Electronics Co

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.

Samsung Electronics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Nordic Semiconductor and Samsung Electronics

The main advantage of trading using opposite Nordic Semiconductor and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic Semiconductor position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.

The idea behind Nordic Semiconductor ASA and Samsung Electronics Co 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.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.