Correlation Between Orsted AS and Novonesis
Can any of the company-specific risk be diversified away by investing in both Orsted AS and Novonesis 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 Orsted AS and Novonesis into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orsted AS and Novonesis AS, you can compare the effects of market volatilities on Orsted AS and Novonesis 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 Orsted AS with a short position of Novonesis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orsted AS and Novonesis.
Diversification Opportunities for Orsted AS and Novonesis
Weak diversification
The 3 months correlation between Orsted and Novonesis is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Orsted AS and Novonesis AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novonesis AS and Orsted AS 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 Orsted AS are associated (or correlated) with Novonesis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novonesis AS has no effect on the direction of Orsted AS i.e., Orsted AS and Novonesis go up and down completely randomly.
Pair Corralation between Orsted AS and Novonesis
Assuming the 90 days trading horizon Orsted AS is expected to under-perform the Novonesis. In addition to that, Orsted AS is 2.14 times more volatile than Novonesis AS. It trades about -0.04 of its total potential returns per unit of risk. Novonesis AS is currently generating about -0.08 per unit of volatility. If you would invest 46,800 in Novonesis AS on November 28, 2024 and sell it today you would lose (6,290) from holding Novonesis AS or give up 13.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Orsted AS vs. Novonesis AS
Performance |
| Timeline |
| Orsted AS |
| Novonesis AS |
Orsted AS and Novonesis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orsted AS and Novonesis
The main advantage of trading using opposite Orsted AS and Novonesis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orsted AS position performs unexpectedly, Novonesis 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 Novonesis will offset losses from the drop in Novonesis' long position.| Orsted AS vs. Nordinvestments AS | Orsted AS vs. Sydbank AS | Orsted AS vs. Danske Andelskassers Bank | Orsted AS vs. BankInv Kort HY |
| Novonesis vs. Skjern Bank AS | Novonesis vs. Jyske Bank AS | Novonesis vs. Ringkjoebing Landbobank AS | Novonesis vs. Hvidbjerg Bank |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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