Correlation Between Nasdaq and H Lundbeck

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

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

Diversification Opportunities for Nasdaq and H Lundbeck

-0.75

Correlation Coefficient

Nasdaq  H Lundbeck

Pay attention - limited upside

The 3 months correlation between Nasdaq and HLUN-A is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and H Lundbeck AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on H Lundbeck AS and Nasdaq 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 Nasdaq Inc are associated (or correlated) with H Lundbeck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of H Lundbeck AS has no effect on the direction of Nasdaq i.e., Nasdaq and H Lundbeck go up and down completely randomly.

Pair Corralation between Nasdaq and H Lundbeck

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.56 times more return on investment than H Lundbeck. However, Nasdaq Inc is 1.79 times less risky than H Lundbeck. It trades about 0.17 of its potential returns per unit of risk. H Lundbeck AS is currently generating about -0.13 per unit of risk. If you would invest  7,308  in Nasdaq Inc on September 14, 2024 and sell it today you would earn a total of  779.00  from holding Nasdaq Inc or generate 10.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Nasdaq Inc  vs.  H Lundbeck AS

Nasdaq Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in January 2025.

H Lundbeck AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days H Lundbeck AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nasdaq and H Lundbeck

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

The idea behind Nasdaq Inc and H Lundbeck 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.

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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.