Correlation Between CHINA EDUCATION and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and Novo Nordisk 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 CHINA EDUCATION and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and Novo Nordisk AS, you can compare the effects of market volatilities on CHINA EDUCATION and Novo Nordisk 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 CHINA EDUCATION with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and Novo Nordisk.
Diversification Opportunities for CHINA EDUCATION and Novo Nordisk
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHINA and Novo is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and Novo Nordisk AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novo Nordisk AS and CHINA EDUCATION 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 CHINA EDUCATION GROUP are associated (or correlated) with Novo Nordisk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novo Nordisk AS has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and Novo Nordisk go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and Novo Nordisk
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 0.69 times more return on investment than Novo Nordisk. However, CHINA EDUCATION GROUP is 1.44 times less risky than Novo Nordisk. It trades about 0.18 of its potential returns per unit of risk. Novo Nordisk AS is currently generating about 0.0 per unit of risk. If you would invest 38.00 in CHINA EDUCATION GROUP on November 5, 2024 and sell it today you would earn a total of 3.00 from holding CHINA EDUCATION GROUP or generate 7.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. Novo Nordisk AS
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| Novo Nordisk AS |
CHINA EDUCATION and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and Novo Nordisk
The main advantage of trading using opposite CHINA EDUCATION and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, Novo Nordisk 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 Novo Nordisk will offset losses from the drop in Novo Nordisk's long position.| CHINA EDUCATION vs. STGEORGE MINING LTD | CHINA EDUCATION vs. GALENA MINING LTD | CHINA EDUCATION vs. Hyatt Hotels | CHINA EDUCATION vs. BRAEMAR HOTELS RES |
| Novo Nordisk vs. TOWNSQUARE MEDIA INC | Novo Nordisk vs. Universal Entertainment | Novo Nordisk vs. Corporate Office Properties | Novo Nordisk vs. RCS MediaGroup SpA |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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