Correlation Between Novo Nordisk and Bionomics
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Bionomics 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 Novo Nordisk and Bionomics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novo Nordisk AS and Bionomics Limited, you can compare the effects of market volatilities on Novo Nordisk and Bionomics 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 Novo Nordisk with a short position of Bionomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Bionomics.
Diversification Opportunities for Novo Nordisk and Bionomics
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Novo and Bionomics is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Bionomics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bionomics Limited and Novo Nordisk 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 Novo Nordisk AS are associated (or correlated) with Bionomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bionomics Limited has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Bionomics go up and down completely randomly.
Pair Corralation between Novo Nordisk and Bionomics
Assuming the 90 days horizon Novo Nordisk is expected to generate 47.6 times less return on investment than Bionomics. But when comparing it to its historical volatility, Novo Nordisk AS is 17.85 times less risky than Bionomics. It trades about 0.05 of its potential returns per unit of risk. Bionomics Limited is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1.27 in Bionomics Limited on September 1, 2024 and sell it today you would earn a total of 0.04 from holding Bionomics Limited or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 24.84% |
| Values | Daily Returns |
Novo Nordisk AS vs. Bionomics Limited
Performance |
| Timeline |
| Novo Nordisk AS |
| Bionomics Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Novo Nordisk and Bionomics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Bionomics
The main advantage of trading using opposite Novo Nordisk and Bionomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Bionomics 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 Bionomics will offset losses from the drop in Bionomics' long position.| Novo Nordisk vs. Rigel Pharmaceuticals | Novo Nordisk vs. Geron | Novo Nordisk vs. Verastem | Novo Nordisk vs. Immutep Ltd ADR |
| Bionomics vs. BetterLife Pharma | Bionomics vs. Entheon Biomedical Corp | Bionomics vs. Pharmather Holdings | Bionomics vs. Intelgenx Technologs |
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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