Correlation Between Novo Nordisk and BankInv Kort

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

Diversification Opportunities for Novo Nordisk and BankInv Kort

-0.32

Correlation Coefficient

Novo Nordisk  BankInv Kort

Very good diversification

The 3 months correlation between Novo and BankInv is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and BankInv Kort HY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BankInv Kort HY 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 BankInv Kort. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BankInv Kort HY has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and BankInv Kort go up and down completely randomly.

Pair Corralation between Novo Nordisk and BankInv Kort

Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 9.68 times more return on investment than BankInv Kort. However, Novo Nordisk is 9.68 times more volatile than BankInv Kort HY. It trades about 0.04 of its potential returns per unit of risk. BankInv Kort HY is currently generating about 0.08 per unit of risk. If you would invest  44,246  in Novo Nordisk AS on October 24, 2024 and sell it today you would earn a total of  13,114  from holding Novo Nordisk AS or generate 29.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.73%
Values	Daily Returns

Novo Nordisk AS  vs.  BankInv Kort HY

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 unfluctuating performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

BankInv Kort HY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BankInv Kort HY are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, BankInv Kort is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Novo Nordisk and BankInv Kort

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

The idea behind Novo Nordisk AS and BankInv Kort HY 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.