Correlation Between Novo Nordisk and ATRYS HEALTH

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

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

Diversification Opportunities for Novo Nordisk and ATRYS HEALTH

0.25

Correlation Coefficient

Novo Nordisk  ATRYS HEALTH

Modest diversification

The 3 months correlation between Novo and ATRYS is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and ATRYS HEALTH SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRYS HEALTH SA and Novo Nordisk 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 Novo Nordisk AS are associated (or correlated) with ATRYS HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRYS HEALTH SA has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and ATRYS HEALTH go up and down completely randomly.

Pair Corralation between Novo Nordisk and ATRYS HEALTH

Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 2.3 times more return on investment than ATRYS HEALTH. However, Novo Nordisk is 2.3 times more volatile than ATRYS HEALTH SA. It trades about 0.03 of its potential returns per unit of risk. ATRYS HEALTH SA is currently generating about 0.02 per unit of risk. If you would invest  10,050  in Novo Nordisk AS on September 23, 2024 and sell it today you would lose (90.00) from holding Novo Nordisk AS or give up 0.9% of portfolio value over 90 days.

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

Novo Nordisk AS  vs.  ATRYS HEALTH SA

Novo Nordisk AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novo Nordisk AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Novo Nordisk is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ATRYS HEALTH SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ATRYS HEALTH SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ATRYS HEALTH is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Novo Nordisk and ATRYS HEALTH

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

The idea behind Novo Nordisk AS and ATRYS HEALTH SA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..