Correlation Between Genmab AS and Nilfisk Holding

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

By analyzing existing cross correlation between Genmab AS and Nilfisk Holding AS, you can compare the effects of market volatilities on Genmab AS and Nilfisk Holding 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 Nilfisk Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genmab AS and Nilfisk Holding.

Diversification Opportunities for Genmab AS and Nilfisk Holding

0.65

Correlation Coefficient

Genmab AS  Nilfisk Holding

Poor diversification

The 3 months correlation between Genmab and Nilfisk is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Genmab AS and Nilfisk Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nilfisk Holding AS 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 Nilfisk Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nilfisk Holding AS has no effect on the direction of Genmab AS i.e., Genmab AS and Nilfisk Holding go up and down completely randomly.

Pair Corralation between Genmab AS and Nilfisk Holding

Assuming the 90 days trading horizon Genmab AS is expected to generate 0.78 times more return on investment than Nilfisk Holding. However, Genmab AS is 1.27 times less risky than Nilfisk Holding. It trades about -0.19 of its potential returns per unit of risk. Nilfisk Holding AS is currently generating about -0.16 per unit of risk. If you would invest  177,500  in Genmab AS on September 17, 2024 and sell it today you would lose (33,250) from holding Genmab AS or give up 18.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.48%
Values	Daily Returns

Genmab AS  vs.  Nilfisk Holding AS

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 weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Nilfisk Holding AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nilfisk Holding AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Genmab AS and Nilfisk Holding

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

The idea behind Genmab AS and Nilfisk Holding AS 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.