Correlation Between Novo Nordisk and Ennogie Solar
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Ennogie Solar 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 Ennogie Solar 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 Ennogie Solar Group, you can compare the effects of market volatilities on Novo Nordisk and Ennogie Solar 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 Ennogie Solar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Ennogie Solar.
Diversification Opportunities for Novo Nordisk and Ennogie Solar
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Novo and Ennogie is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Ennogie Solar Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ennogie Solar Group 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 Ennogie Solar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ennogie Solar Group has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Ennogie Solar go up and down completely randomly.
Pair Corralation between Novo Nordisk and Ennogie Solar
Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 0.5 times more return on investment than Ennogie Solar. However, Novo Nordisk AS is 1.99 times less risky than Ennogie Solar. It trades about 0.06 of its potential returns per unit of risk. Ennogie Solar Group is currently generating about -0.04 per unit of risk. If you would invest 45,354 in Novo Nordisk AS on September 3, 2024 and sell it today you would earn a total of 30,376 from holding Novo Nordisk AS or generate 66.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Ennogie Solar Group
Performance |
| Timeline |
| Novo Nordisk AS |
| Ennogie Solar Group |
Novo Nordisk and Ennogie Solar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Ennogie Solar
The main advantage of trading using opposite Novo Nordisk and Ennogie Solar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Ennogie Solar 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 Ennogie Solar will offset losses from the drop in Ennogie Solar's long position.| Novo Nordisk vs. Vestas Wind Systems | Novo Nordisk vs. Danske Bank AS | Novo Nordisk vs. Bavarian Nordic | Novo Nordisk vs. DSV Panalpina AS |
| Ennogie Solar vs. Green Hydrogen Systems | Ennogie Solar vs. ALK Abell AS | Ennogie Solar vs. H Lundbeck AS | Ennogie Solar vs. TORM plc |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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