Correlation Between Novo Nordisk and Stenocare
Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and Stenocare 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 Stenocare 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 Stenocare AS, you can compare the effects of market volatilities on Novo Nordisk and Stenocare 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 Stenocare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and Stenocare.
Diversification Opportunities for Novo Nordisk and Stenocare
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novo and Stenocare is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Stenocare AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stenocare 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 Stenocare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stenocare AS has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Stenocare go up and down completely randomly.
Pair Corralation between Novo Nordisk and Stenocare
Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 0.31 times more return on investment than Stenocare. However, Novo Nordisk AS is 3.18 times less risky than Stenocare. It trades about 0.06 of its potential returns per unit of risk. Stenocare AS is currently generating about -0.02 per unit of risk. If you would invest 53,845 in Novo Nordisk AS on September 3, 2024 and sell it today you would earn a total of 21,885 from holding Novo Nordisk AS or generate 40.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novo Nordisk AS vs. Stenocare AS
Performance |
| Timeline |
| Novo Nordisk AS |
| Stenocare AS |
Novo Nordisk and Stenocare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novo Nordisk and Stenocare
The main advantage of trading using opposite Novo Nordisk and Stenocare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novo Nordisk position performs unexpectedly, Stenocare 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 Stenocare will offset losses from the drop in Stenocare'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 |
| Stenocare vs. Bavarian Nordic | Stenocare vs. Investeringsselskabet Luxor AS | Stenocare vs. cBrain AS | Stenocare vs. Fast Ejendom |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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