Correlation Between CellaVision and Novotek AB

Can any of the company-specific risk be diversified away by investing in both CellaVision and Novotek 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 CellaVision and Novotek AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CellaVision AB and Novotek AB, you can compare the effects of market volatilities on CellaVision and Novotek 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 CellaVision with a short position of Novotek AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CellaVision and Novotek AB.

Diversification Opportunities for CellaVision and Novotek AB

-0.76

Correlation Coefficient

CellaVision  Novotek AB

Pay attention - limited upside

The 3 months correlation between CellaVision and Novotek is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding CellaVision AB and Novotek AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novotek AB and CellaVision 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 CellaVision AB are associated (or correlated) with Novotek AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novotek AB has no effect on the direction of CellaVision i.e., CellaVision and Novotek AB go up and down completely randomly.

Pair Corralation between CellaVision and Novotek AB

Assuming the 90 days trading horizon CellaVision AB is expected to under-perform the Novotek AB. In addition to that, CellaVision is 1.11 times more volatile than Novotek AB. It trades about -0.1 of its total potential returns per unit of risk. Novotek AB is currently generating about 0.03 per unit of volatility. If you would invest  6,480  in Novotek AB on August 31, 2024 and sell it today you would earn a total of  220.00  from holding Novotek AB or generate 3.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CellaVision AB  vs.  Novotek AB

CellaVision AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CellaVision AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Novotek AB

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Novotek AB are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Novotek AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CellaVision and Novotek AB

The main advantage of trading using opposite CellaVision and Novotek AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CellaVision position performs unexpectedly, Novotek 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 Novotek AB will offset losses from the drop in Novotek AB's long position.

The idea behind CellaVision AB and Novotek AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.