Correlation Between SUN ART and Nordic Semiconductor

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

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

Diversification Opportunities for SUN ART and Nordic Semiconductor

0.83

Correlation Coefficient

SUN ART  Nordic Semiconductor

Very poor diversification

The 3 months correlation between SUN and Nordic is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding SUN ART RETAIL 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 SUN ART 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 SUN ART RETAIL 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 SUN ART i.e., SUN ART and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between SUN ART and Nordic Semiconductor

Assuming the 90 days trading horizon SUN ART RETAIL is expected to under-perform the Nordic Semiconductor. In addition to that, SUN ART is 2.13 times more volatile than Nordic Semiconductor ASA. It trades about -0.23 of its total potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.04 per unit of volatility. If you would invest  1,165  in Nordic Semiconductor ASA on April 9, 2025 and sell it today you would lose (18.00) from holding Nordic Semiconductor ASA or give up 1.55% of portfolio value over 90 days.

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

SUN ART RETAIL  vs.  Nordic Semiconductor ASA

SUN ART RETAIL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SUN ART RETAIL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile forward indicators, SUN ART exhibited 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 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nordic Semiconductor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SUN ART and Nordic Semiconductor

The main advantage of trading using opposite SUN ART and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SUN ART 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 SUN ART RETAIL 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.