Correlation Between Qingdao Port and Nordic Semiconductor

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

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

Diversification Opportunities for Qingdao Port and Nordic Semiconductor

-0.37

Correlation Coefficient

Qingdao Port  Nordic Semiconductor

Very good diversification

The 3 months correlation between Qingdao and Nordic is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Qingdao Port International 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 Qingdao Port 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 Qingdao Port International 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 Qingdao Port i.e., Qingdao Port and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between Qingdao Port and Nordic Semiconductor

Assuming the 90 days horizon Qingdao Port International is expected to generate 1.72 times more return on investment than Nordic Semiconductor. However, Qingdao Port is 1.72 times more volatile than Nordic Semiconductor ASA. It trades about 0.15 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  53.00  in Qingdao Port International on September 26, 2024 and sell it today you would earn a total of  20.00  from holding Qingdao Port International or generate 37.74% return on investment over 90 days.

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

Qingdao Port International  vs.  Nordic Semiconductor ASA

Qingdao Port Interna

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qingdao Port International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Qingdao Port reported solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain 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 Qingdao Port and Nordic Semiconductor

The main advantage of trading using opposite Qingdao Port and Nordic Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qingdao Port 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 Qingdao Port International 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.