Correlation Between Genmab AS and Nordea Invest

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

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

Diversification Opportunities for Genmab AS and Nordea Invest

-0.4

Correlation Coefficient

Genmab AS  Nordea Invest

Very good diversification

The 3 months correlation between Genmab and Nordea is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Genmab AS and Nordea Invest Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordea Invest Global and Genmab 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 Genmab AS are associated (or correlated) with Nordea Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordea Invest Global has no effect on the direction of Genmab AS i.e., Genmab AS and Nordea Invest go up and down completely randomly.

Pair Corralation between Genmab AS and Nordea Invest

Assuming the 90 days trading horizon Genmab AS is expected to generate 2.85 times less return on investment than Nordea Invest. In addition to that, Genmab AS is 1.45 times more volatile than Nordea Invest Global. It trades about 0.01 of its total potential returns per unit of risk. Nordea Invest Global is currently generating about 0.02 per unit of volatility. If you would invest  4,380  in Nordea Invest Global on October 11, 2024 and sell it today you would earn a total of  45.00  from holding Nordea Invest Global or generate 1.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	86.67%
Values	Daily Returns

Genmab AS  vs.  Nordea Invest Global

Genmab AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genmab AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Genmab AS is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Nordea Invest Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nordea Invest Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Nordea Invest is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Genmab AS and Nordea Invest

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

The idea behind Genmab AS and Nordea Invest Global 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.