Correlation Between Novotek AB and Lipum AB
Can any of the company-specific risk be diversified away by investing in both Novotek AB and Lipum AB 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 Lipum AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novotek AB and Lipum AB, you can compare the effects of market volatilities on Novotek AB and Lipum AB 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 Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novotek AB and Lipum AB.
Diversification Opportunities for Novotek AB and Lipum AB
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Novotek and Lipum is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Novotek AB and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum AB 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Novotek AB i.e., Novotek AB and Lipum AB go up and down completely randomly.
Pair Corralation between Novotek AB and Lipum AB
Assuming the 90 days trading horizon Novotek AB is expected to generate 1.06 times more return on investment than Lipum AB. However, Novotek AB is 1.06 times more volatile than Lipum AB. It trades about 0.27 of its potential returns per unit of risk. Lipum AB is currently generating about 0.27 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novotek AB vs. Lipum AB
Performance |
| Timeline |
| Novotek AB |
| Lipum AB |
Novotek AB and Lipum AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novotek AB and Lipum AB
The main advantage of trading using opposite Novotek AB and Lipum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novotek AB position performs unexpectedly, Lipum AB 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 Lipum AB will offset losses from the drop in Lipum AB's long position.| Novotek AB vs. Softronic AB | Novotek AB vs. Prevas AB | Novotek AB vs. FormPipe Software AB | Novotek AB vs. Dedicare AB |
| Lipum AB vs. Ascelia Pharma AB | Lipum AB vs. NextCell Pharma AB | Lipum AB vs. Annexin Pharmaceuticals AB | Lipum AB vs. AlzeCure Pharma |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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