Correlation Between Bavarian Nordic and NKT AS
Can any of the company-specific risk be diversified away by investing in both Bavarian Nordic and NKT AS 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 Bavarian Nordic and NKT AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bavarian Nordic and NKT AS, you can compare the effects of market volatilities on Bavarian Nordic and NKT AS 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 Bavarian Nordic with a short position of NKT AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bavarian Nordic and NKT AS.
Diversification Opportunities for Bavarian Nordic and NKT AS
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bavarian and NKT is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bavarian Nordic and NKT AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NKT AS and Bavarian Nordic 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 Bavarian Nordic are associated (or correlated) with NKT AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NKT AS has no effect on the direction of Bavarian Nordic i.e., Bavarian Nordic and NKT AS go up and down completely randomly.
Pair Corralation between Bavarian Nordic and NKT AS
Assuming the 90 days trading horizon Bavarian Nordic is expected to generate 1.27 times more return on investment than NKT AS. However, Bavarian Nordic is 1.27 times more volatile than NKT AS. It trades about 0.11 of its potential returns per unit of risk. NKT AS is currently generating about -0.3 per unit of risk. If you would invest 18,530 in Bavarian Nordic on September 19, 2024 and sell it today you would earn a total of 820.00 from holding Bavarian Nordic or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bavarian Nordic vs. NKT AS
Performance |
| Timeline |
| Bavarian Nordic |
| NKT AS |
Bavarian Nordic and NKT AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bavarian Nordic and NKT AS
The main advantage of trading using opposite Bavarian Nordic and NKT AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bavarian Nordic position performs unexpectedly, NKT AS 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 NKT AS will offset losses from the drop in NKT AS's long position.| Bavarian Nordic vs. Ambu AS | Bavarian Nordic vs. Danske Bank AS | Bavarian Nordic vs. Genmab AS | Bavarian Nordic vs. DSV Panalpina AS |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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