Correlation Between Embla Medical and Novo Nordisk
Can any of the company-specific risk be diversified away by investing in both Embla Medical 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 Embla Medical and Novo Nordisk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embla Medical hf and Novo Nordisk AS, you can compare the effects of market volatilities on Embla Medical 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 Embla Medical with a short position of Novo Nordisk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embla Medical and Novo Nordisk.
Diversification Opportunities for Embla Medical and Novo Nordisk
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Embla and Novo is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Embla Medical hf 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 Embla Medical 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 Embla Medical hf 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 Embla Medical i.e., Embla Medical and Novo Nordisk go up and down completely randomly.
Pair Corralation between Embla Medical and Novo Nordisk
Assuming the 90 days trading horizon Embla Medical hf is expected to generate 0.85 times more return on investment than Novo Nordisk. However, Embla Medical hf is 1.18 times less risky than Novo Nordisk. It trades about 0.12 of its potential returns per unit of risk. Novo Nordisk AS is currently generating about -0.07 per unit of risk. If you would invest 2,790 in Embla Medical hf on August 30, 2024 and sell it today you would earn a total of 770.00 from holding Embla Medical hf or generate 27.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embla Medical hf vs. Novo Nordisk AS
Performance |
| Timeline |
| Embla Medical hf |
| Novo Nordisk AS |
Embla Medical and Novo Nordisk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embla Medical and Novo Nordisk
The main advantage of trading using opposite Embla Medical and Novo Nordisk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embla Medical 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.| Embla Medical vs. Novo Nordisk AS | Embla Medical vs. Nordea Bank Abp | Embla Medical vs. DSV Panalpina AS | Embla Medical vs. AP Mller |
| Novo Nordisk vs. Vestas Wind Systems | Novo Nordisk vs. Danske Bank AS | Novo Nordisk vs. Bavarian Nordic | Novo Nordisk 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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