Correlation Between Novotek AB and New Nordic
Can any of the company-specific risk be diversified away by investing in both Novotek AB and New Nordic 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 New Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novotek AB and New Nordic Healthbrands, you can compare the effects of market volatilities on Novotek AB and New Nordic 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 New Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novotek AB and New Nordic.
Diversification Opportunities for Novotek AB and New Nordic
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Novotek and New is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Novotek AB and New Nordic Healthbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Nordic Healthbrands 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 New Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Nordic Healthbrands has no effect on the direction of Novotek AB i.e., Novotek AB and New Nordic go up and down completely randomly.
Pair Corralation between Novotek AB and New Nordic
Assuming the 90 days trading horizon Novotek AB is expected to generate 1.19 times more return on investment than New Nordic. However, Novotek AB is 1.19 times more volatile than New Nordic Healthbrands. It trades about 0.13 of its potential returns per unit of risk. New Nordic Healthbrands is currently generating about -0.17 per unit of risk. If you would invest 6,100 in Novotek AB on September 1, 2024 and sell it today you would earn a total of 480.00 from holding Novotek AB or generate 7.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Novotek AB vs. New Nordic Healthbrands
Performance |
| Timeline |
| Novotek AB |
| New Nordic Healthbrands |
Novotek AB and New Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novotek AB and New Nordic
The main advantage of trading using opposite Novotek AB and New Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novotek AB position performs unexpectedly, New Nordic 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 New Nordic will offset losses from the drop in New Nordic's long position.| Novotek AB vs. Softronic AB | Novotek AB vs. Prevas AB | Novotek AB vs. FormPipe Software AB | Novotek AB vs. Dedicare AB |
| New Nordic vs. Stille AB | New Nordic vs. Midsona AB | New Nordic vs. Precio Fishbone AB | New Nordic vs. C Rad 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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