Correlation Between Codan and Nordic Semiconductor

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

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

Diversification Opportunities for Codan and Nordic Semiconductor

-0.39

Correlation Coefficient

Codan  Nordic Semiconductor

Very good diversification

The 3 months correlation between Codan and Nordic is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Codan Limited 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 Codan 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 Codan Limited 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 Codan i.e., Codan and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between Codan and Nordic Semiconductor

Assuming the 90 days horizon Codan Limited is expected to generate 1.32 times more return on investment than Nordic Semiconductor. However, Codan is 1.32 times more volatile than Nordic Semiconductor ASA. It trades about 0.1 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.04 per unit of risk. If you would invest  496.00  in Codan Limited on August 17, 2025 and sell it today you would earn a total of  1,878  from holding Codan Limited or generate 378.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	72.73%
Values	Daily Returns

Codan Limited  vs.  Nordic Semiconductor ASA

Codan Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Codan Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Codan reported solid returns over the last few months and may actually be approaching a breakup point.

Nordic Semiconductor ASA

Risk-Adjusted Performance

Weakest

Over the last 90 days Nordic Semiconductor ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Codan and Nordic Semiconductor

The main advantage of trading using opposite Codan and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Codan 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 Codan Limited 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.