Correlation Between Novonesis and North Media
Can any of the company-specific risk be diversified away by investing in both Novonesis and North Media 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 Novonesis and North Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novonesis AS and North Media AS, you can compare the effects of market volatilities on Novonesis and North Media 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 Novonesis with a short position of North Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonesis and North Media.
Diversification Opportunities for Novonesis and North Media
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Novonesis and North is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Novonesis AS and North Media AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North Media AS and Novonesis 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 Novonesis AS are associated (or correlated) with North Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North Media AS has no effect on the direction of Novonesis i.e., Novonesis and North Media go up and down completely randomly.
Pair Corralation between Novonesis and North Media
Assuming the 90 days trading horizon Novonesis AS is expected to generate 0.87 times more return on investment than North Media. However, Novonesis AS is 1.15 times less risky than North Media. It trades about 0.05 of its potential returns per unit of risk. North Media AS is currently generating about -0.03 per unit of risk. If you would invest 32,708 in Novonesis AS on September 2, 2024 and sell it today you would earn a total of 8,662 from holding Novonesis AS or generate 26.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novonesis AS vs. North Media AS
Performance |
| Timeline |
| Novonesis AS |
| North Media AS |
Novonesis and North Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novonesis and North Media
The main advantage of trading using opposite Novonesis and North Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonesis position performs unexpectedly, North Media 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 North Media will offset losses from the drop in North Media's long position.| Novonesis vs. Novo Nordisk AS | Novonesis vs. Nordea Bank Abp | Novonesis vs. DSV Panalpina AS | Novonesis vs. AP Mller |
| North Media vs. Matas AS | North Media vs. cBrain AS | North Media vs. Alm Brand | North Media vs. Netcompany Group AS |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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