Correlation Between Novo Nordisk and Risma Systems

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

Diversification Opportunities for Novo Nordisk and Risma Systems

0.11

Correlation Coefficient

Novo Nordisk  Risma Systems

Average diversification

The 3 months correlation between Novo and Risma is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Risma Systems AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risma Systems AS 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 Risma Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risma Systems AS has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Risma Systems go up and down completely randomly.

Pair Corralation between Novo Nordisk and Risma Systems

Assuming the 90 days trading horizon Novo Nordisk AS is expected to under-perform the Risma Systems. But the stock apears to be less risky and, when comparing its historical volatility, Novo Nordisk AS is 1.78 times less risky than Risma Systems. The stock trades about -0.13 of its potential returns per unit of risk. The Risma Systems AS is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  815.00  in Risma Systems AS on December 30, 2024 and sell it today you would lose (65.00) from holding Risma Systems AS or give up 7.98% of portfolio value over 90 days.

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

Novo Nordisk AS  vs.  Risma Systems 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.

Risma Systems AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Risma Systems AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Risma Systems is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Novo Nordisk and Risma Systems

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

The idea behind Novo Nordisk AS and Risma Systems 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.