Correlation Between Novo Nordisk and DKINMAKK

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Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and DKINMAKK 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 DKINMAKK 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 Investeringsforeningen Danske Invest, you can compare the effects of market volatilities on Novo Nordisk and DKINMAKK 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 DKINMAKK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and DKINMAKK.

Diversification Opportunities for Novo Nordisk and DKINMAKK

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Novo and DKINMAKK is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Investeringsforeningen Danske in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investeringsforeningen 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 DKINMAKK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investeringsforeningen has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and DKINMAKK go up and down completely randomly.

Pair Corralation between Novo Nordisk and DKINMAKK

Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 2.29 times more return on investment than DKINMAKK. However, Novo Nordisk is 2.29 times more volatile than Investeringsforeningen Danske Invest. It trades about 0.07 of its potential returns per unit of risk. Investeringsforeningen Danske Invest is currently generating about 0.05 per unit of risk. If you would invest  45,559  in Novo Nordisk AS on September 12, 2024 and sell it today you would earn a total of  32,691  from holding Novo Nordisk AS or generate 71.76% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy99.8%
ValuesDaily Returns

Novo Nordisk AS  vs.  Investeringsforeningen Danske

 Performance 
       Timeline  
Novo Nordisk AS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Novo Nordisk AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Investeringsforeningen 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Investeringsforeningen Danske Invest are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady primary indicators, DKINMAKK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Novo Nordisk and DKINMAKK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Novo Nordisk and DKINMAKK

The main advantage of trading using opposite Novo Nordisk and DKINMAKK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, DKINMAKK 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 DKINMAKK will offset losses from the drop in DKINMAKK's long position.
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The idea behind Novo Nordisk AS and Investeringsforeningen Danske Invest pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.

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