Correlation Between Novo Nordisk and IBEX Technologies

Can any of the company-specific risk be diversified away by investing in both Novo Nordisk and IBEX Technologies 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 IBEX Technologies 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 IBEX Technologies, you can compare the effects of market volatilities on Novo Nordisk and IBEX Technologies 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 IBEX Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novo Nordisk and IBEX Technologies.

Diversification Opportunities for Novo Nordisk and IBEX Technologies

-0.24

Correlation Coefficient

Novo Nordisk  IBEX Technologies

Very good diversification

The 3 months correlation between Novo and IBEX is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and IBEX Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBEX Technologies 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 IBEX Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBEX Technologies has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and IBEX Technologies go up and down completely randomly.

Pair Corralation between Novo Nordisk and IBEX Technologies

Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 1.31 times more return on investment than IBEX Technologies. However, Novo Nordisk is 1.31 times more volatile than IBEX Technologies. It trades about 0.06 of its potential returns per unit of risk. IBEX Technologies is currently generating about 0.03 per unit of risk. If you would invest  9,740  in Novo Nordisk AS on September 22, 2024 and sell it today you would earn a total of  220.00  from holding Novo Nordisk AS or generate 2.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Novo Nordisk AS  vs.  IBEX Technologies

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

IBEX Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IBEX Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IBEX Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Novo Nordisk and IBEX Technologies

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

The idea behind Novo Nordisk AS and IBEX Technologies 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.