Correlation Between Nnit AS and Zealand Pharma

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

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

Diversification Opportunities for Nnit AS and Zealand Pharma

0.74

Correlation Coefficient

Nnit AS  Zealand Pharma

Poor diversification

The 3 months correlation between Nnit and Zealand is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nnit AS and Zealand Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zealand Pharma AS and Nnit 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 Nnit AS are associated (or correlated) with Zealand Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zealand Pharma AS has no effect on the direction of Nnit AS i.e., Nnit AS and Zealand Pharma go up and down completely randomly.

Pair Corralation between Nnit AS and Zealand Pharma

Assuming the 90 days trading horizon Nnit AS is expected to under-perform the Zealand Pharma. But the stock apears to be less risky and, when comparing its historical volatility, Nnit AS is 2.65 times less risky than Zealand Pharma. The stock trades about -0.19 of its potential returns per unit of risk. The Zealand Pharma AS is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  73,350  in Zealand Pharma AS on December 27, 2024 and sell it today you would lose (20,000) from holding Zealand Pharma AS or give up 27.27% of portfolio value over 90 days.

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

Nnit AS  vs.  Zealand Pharma AS

Nnit AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nnit 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Zealand Pharma AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Zealand Pharma 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Nnit AS and Zealand Pharma

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

The idea behind Nnit AS and Zealand Pharma 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.