Correlation Between Nordic Semiconductor and AUST AGRICULTURAL

Can any of the company-specific risk be diversified away by investing in both Nordic Semiconductor and AUST AGRICULTURAL 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 AUST AGRICULTURAL 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 AUST AGRICULTURAL, you can compare the effects of market volatilities on Nordic Semiconductor and AUST AGRICULTURAL 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 AUST AGRICULTURAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic Semiconductor and AUST AGRICULTURAL.

Diversification Opportunities for Nordic Semiconductor and AUST AGRICULTURAL

0.07

Correlation Coefficient

Nordic Semiconductor  AUST AGRICULTURAL

Significant diversification

The 3 months correlation between Nordic and AUST is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nordic Semiconductor ASA and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL 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 AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of Nordic Semiconductor i.e., Nordic Semiconductor and AUST AGRICULTURAL go up and down completely randomly.

Pair Corralation between Nordic Semiconductor and AUST AGRICULTURAL

Assuming the 90 days horizon Nordic Semiconductor ASA is expected to generate 2.09 times more return on investment than AUST AGRICULTURAL. However, Nordic Semiconductor is 2.09 times more volatile than AUST AGRICULTURAL. It trades about -0.02 of its potential returns per unit of risk. AUST AGRICULTURAL is currently generating about -0.1 per unit of risk. If you would invest  889.00  in Nordic Semiconductor ASA on September 30, 2024 and sell it today you would lose (42.00) from holding Nordic Semiconductor ASA or give up 4.72% of portfolio value over 90 days.

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

Nordic Semiconductor ASA  vs.  AUST AGRICULTURAL

Nordic Semiconductor ASA

Risk-Adjusted Performance

0 of 100

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 nearly stable basic indicators, Nordic Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AUST AGRICULTURAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AUST AGRICULTURAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Nordic Semiconductor and AUST AGRICULTURAL

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

The idea behind Nordic Semiconductor ASA and AUST AGRICULTURAL 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.