Correlation Between Exsitec Holding and Novotek AB

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

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

Diversification Opportunities for Exsitec Holding and Novotek AB

-0.5

Correlation Coefficient

Exsitec Holding  Novotek AB

Very good diversification

The 3 months correlation between Exsitec and Novotek is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Exsitec Holding AB and Novotek AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novotek AB and Exsitec Holding 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 Exsitec Holding 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 Exsitec Holding i.e., Exsitec Holding and Novotek AB go up and down completely randomly.

Pair Corralation between Exsitec Holding and Novotek AB

Assuming the 90 days trading horizon Exsitec Holding AB is expected to under-perform the Novotek AB. In addition to that, Exsitec Holding is 1.29 times more volatile than Novotek AB. It trades about -0.16 of its total potential returns per unit of risk. Novotek AB is currently generating about 0.06 per unit of volatility. If you would invest  7,340  in Novotek AB on December 29, 2024 and sell it today you would earn a total of  460.00  from holding Novotek AB or generate 6.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Exsitec Holding AB  vs.  Novotek AB

Exsitec Holding AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exsitec Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Novotek AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Novotek AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Novotek AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Exsitec Holding and Novotek AB

The main advantage of trading using opposite Exsitec Holding and Novotek AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exsitec Holding 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 Exsitec Holding 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.