Correlation Between Novo Nordisk and Zealand Pharma
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Zealand Pharma 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 Zealand Pharma 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 Zealand Pharma AS, you can compare the effects of market volatilities on Novo Nordisk and Zealand Pharma 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 Zealand Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Zealand Pharma.
Diversification Opportunities for Novo Nordisk and Zealand Pharma
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novo and Zealand is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Zealand Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zealand Pharma AS 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 Zealand Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zealand Pharma AS has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Zealand Pharma go up and down completely randomly.
Pair Corralation between Novo Nordisk and Zealand Pharma
Assuming the 90 days horizon Novo Nordisk AS is expected to generate 0.61 times more return on investment than Zealand Pharma. However, Novo Nordisk AS is 1.63 times less risky than Zealand Pharma. It trades about -0.06 of its potential returns per unit of risk. Zealand Pharma AS is currently generating about -0.15 per unit of risk. If you would invest 11,080 in Novo Nordisk AS on August 31, 2024 and sell it today you would lose (421.00) from holding Novo Nordisk AS or give up 3.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Zealand Pharma AS
Performance |
| Timeline |
| Novo Nordisk AS |
| Zealand Pharma AS |
Novo Nordisk and Zealand Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Zealand Pharma
The main advantage of trading using opposite Novo Nordisk and Zealand Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Zealand Pharma 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 Zealand Pharma will offset losses from the drop in Zealand Pharma's long position.| Novo Nordisk vs. Nuvalent | Novo Nordisk vs. Arcellx | Novo Nordisk vs. Vaxcyte | Novo Nordisk vs. Viridian Therapeutics |
| Zealand Pharma vs. NewAmsterdam Pharma | Zealand Pharma vs. Portage Biotech | Zealand Pharma vs. DBV Technologies | Zealand Pharma vs. NewAmsterdam Pharma |
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 Managers module to screen money managers from public funds and ETFs managed around the world.
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