Correlation Between Novotek AB and Havsfrun Investment
Can any of the company-specific risk be diversified away by investing in both Novotek AB and Havsfrun Investment 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 Novotek AB and Havsfrun Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novotek AB and Havsfrun Investment AB, you can compare the effects of market volatilities on Novotek AB and Havsfrun Investment 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 Novotek AB with a short position of Havsfrun Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novotek AB and Havsfrun Investment.
Diversification Opportunities for Novotek AB and Havsfrun Investment
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Novotek and Havsfrun is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Novotek AB and Havsfrun Investment AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Havsfrun Investment and Novotek AB 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 Novotek AB are associated (or correlated) with Havsfrun Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Havsfrun Investment has no effect on the direction of Novotek AB i.e., Novotek AB and Havsfrun Investment go up and down completely randomly.
Pair Corralation between Novotek AB and Havsfrun Investment
Assuming the 90 days trading horizon Novotek AB is expected to generate 1.02 times more return on investment than Havsfrun Investment. However, Novotek AB is 1.02 times more volatile than Havsfrun Investment AB. It trades about 0.27 of its potential returns per unit of risk. Havsfrun Investment AB is currently generating about 0.22 per unit of risk. If you would invest 5,580 in Novotek AB on August 29, 2024 and sell it today you would earn a total of 1,020 from holding Novotek AB or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novotek AB vs. Havsfrun Investment AB
Performance |
| Timeline |
| Novotek AB |
| Havsfrun Investment |
Novotek AB and Havsfrun Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novotek AB and Havsfrun Investment
The main advantage of trading using opposite Novotek AB and Havsfrun Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novotek AB position performs unexpectedly, Havsfrun Investment 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 Havsfrun Investment will offset losses from the drop in Havsfrun Investment's long position.| Novotek AB vs. Softronic AB | Novotek AB vs. Prevas AB | Novotek AB vs. FormPipe Software AB | Novotek AB vs. Dedicare AB |
| Havsfrun Investment vs. NAXS Nordic Access | Havsfrun Investment vs. FormPipe Software AB | Havsfrun Investment vs. Novotek AB | Havsfrun Investment vs. KABE Group AB |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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