Correlation Between Novo Nordisk and HH International

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

Diversification Opportunities for Novo Nordisk and HH International

-0.06

Correlation Coefficient

Novo Nordisk  HH International

Good diversification

The 3 months correlation between Novo and HH International is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and HH International AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HH International 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 HH International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HH International has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and HH International go up and down completely randomly.

Pair Corralation between Novo Nordisk and HH International

Assuming the 90 days trading horizon Novo Nordisk AS is expected to under-perform the HH International. In addition to that, Novo Nordisk is 2.07 times more volatile than HH International AS. It trades about -0.07 of its total potential returns per unit of risk. HH International AS is currently generating about 0.24 per unit of volatility. If you would invest  7,750  in HH International AS on December 3, 2024 and sell it today you would earn a total of  2,210  from holding HH International AS or generate 28.52% return on investment over 90 days.

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

Novo Nordisk AS  vs.  HH International AS

Novo Nordisk AS

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

HH International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HH International AS are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, HH International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novo Nordisk and HH International

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

The idea behind Novo Nordisk AS and HH International 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.