Correlation Between Novotek AB and Precise Biometrics
Can any of the company-specific risk be diversified away by investing in both Novotek AB and Precise Biometrics 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 Precise Biometrics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novotek AB and Precise Biometrics AB, you can compare the effects of market volatilities on Novotek AB and Precise Biometrics 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 Precise Biometrics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novotek AB and Precise Biometrics.
Diversification Opportunities for Novotek AB and Precise Biometrics
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Novotek and Precise is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Novotek AB and Precise Biometrics AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precise Biometrics 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 Precise Biometrics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precise Biometrics has no effect on the direction of Novotek AB i.e., Novotek AB and Precise Biometrics go up and down completely randomly.
Pair Corralation between Novotek AB and Precise Biometrics
Assuming the 90 days trading horizon Novotek AB is expected to generate 1.36 times less return on investment than Precise Biometrics. But when comparing it to its historical volatility, Novotek AB is 2.89 times less risky than Precise Biometrics. It trades about 0.28 of its potential returns per unit of risk. Precise Biometrics AB is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 360.00 in Precise Biometrics AB on August 24, 2024 and sell it today you would earn a total of 73.00 from holding Precise Biometrics AB or generate 20.28% 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. Precise Biometrics AB
Performance |
| Timeline |
| Novotek AB |
| Precise Biometrics |
Novotek AB and Precise Biometrics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novotek AB and Precise Biometrics
The main advantage of trading using opposite Novotek AB and Precise Biometrics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novotek AB position performs unexpectedly, Precise Biometrics 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 Precise Biometrics will offset losses from the drop in Precise Biometrics' long position.| Novotek AB vs. Softronic AB | Novotek AB vs. Svedbergs i Dalstorp | Novotek AB vs. Know IT AB | Novotek AB vs. FormPipe Software AB |
| Precise Biometrics vs. Enea AB | Precise Biometrics vs. Novotek AB | Precise Biometrics vs. Addnode Group AB | Precise Biometrics vs. Softronic 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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