Correlation Between Novotek AB and Malmbergs Elektriska
Can any of the company-specific risk be diversified away by investing in both Novotek AB and Malmbergs Elektriska 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 Malmbergs Elektriska into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novotek AB and Malmbergs Elektriska AB, you can compare the effects of market volatilities on Novotek AB and Malmbergs Elektriska 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 Malmbergs Elektriska. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novotek AB and Malmbergs Elektriska.
Diversification Opportunities for Novotek AB and Malmbergs Elektriska
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novotek and Malmbergs is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Novotek AB and Malmbergs Elektriska AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malmbergs Elektriska 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 Malmbergs Elektriska. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malmbergs Elektriska has no effect on the direction of Novotek AB i.e., Novotek AB and Malmbergs Elektriska go up and down completely randomly.
Pair Corralation between Novotek AB and Malmbergs Elektriska
Assuming the 90 days trading horizon Novotek AB is expected to generate 1.73 times more return on investment than Malmbergs Elektriska. However, Novotek AB is 1.73 times more volatile than Malmbergs Elektriska AB. It trades about 0.3 of its potential returns per unit of risk. Malmbergs Elektriska AB is currently generating about -0.11 per unit of risk. If you would invest 5,580 in Novotek AB on August 28, 2024 and sell it today you would earn a total of 1,120 from holding Novotek AB or generate 20.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novotek AB vs. Malmbergs Elektriska AB
Performance |
| Timeline |
| Novotek AB |
| Malmbergs Elektriska |
Novotek AB and Malmbergs Elektriska Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novotek AB and Malmbergs Elektriska
The main advantage of trading using opposite Novotek AB and Malmbergs Elektriska positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novotek AB position performs unexpectedly, Malmbergs Elektriska 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 Malmbergs Elektriska will offset losses from the drop in Malmbergs Elektriska's long position.| Novotek AB vs. Softronic AB | Novotek AB vs. Prevas AB | Novotek AB vs. FormPipe Software AB | Novotek AB vs. Dedicare AB |
| Malmbergs Elektriska vs. Divio Technologies AB | Malmbergs Elektriska vs. XMReality AB | Malmbergs Elektriska vs. KABE Group AB | Malmbergs Elektriska vs. IAR Systems Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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