Correlation Between Genmab AS and NTG Nordic

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

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

Diversification Opportunities for Genmab AS and NTG Nordic

-0.31

Correlation Coefficient

Genmab AS  NTG Nordic

Very good diversification

The 3 months correlation between Genmab and NTG is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Genmab AS and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport 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 NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of Genmab AS i.e., Genmab AS and NTG Nordic go up and down completely randomly.

Pair Corralation between Genmab AS and NTG Nordic

Assuming the 90 days trading horizon Genmab AS is expected to under-perform the NTG Nordic. In addition to that, Genmab AS is 1.52 times more volatile than NTG Nordic Transport. It trades about -0.04 of its total potential returns per unit of risk. NTG Nordic Transport is currently generating about 0.05 per unit of volatility. If you would invest  25,650  in NTG Nordic Transport on December 29, 2024 and sell it today you would earn a total of  1,350  from holding NTG Nordic Transport or generate 5.26% return on investment over 90 days.

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

Genmab AS  vs.  NTG Nordic Transport

Genmab AS

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

NTG Nordic Transport

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NTG Nordic Transport are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, NTG Nordic is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Genmab AS and NTG Nordic

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

The idea behind Genmab AS and NTG Nordic Transport 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.