Correlation Between Novotek AB and Exsitec Holding

Can any of the company-specific risk be diversified away by investing in both Novotek AB and Exsitec Holding 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 Novotek AB and Exsitec Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Novotek AB and Exsitec Holding AB, you can compare the effects of market volatilities on Novotek AB and Exsitec Holding 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 Novotek AB with a short position of Exsitec Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novotek AB and Exsitec Holding.

Diversification Opportunities for Novotek AB and Exsitec Holding

-0.5

Correlation Coefficient

Novotek AB  Exsitec Holding

Very good diversification

The 3 months correlation between Novotek and Exsitec is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Novotek AB and Exsitec Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exsitec Holding AB and Novotek AB 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 Novotek AB are associated (or correlated) with Exsitec Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exsitec Holding AB has no effect on the direction of Novotek AB i.e., Novotek AB and Exsitec Holding go up and down completely randomly.

Pair Corralation between Novotek AB and Exsitec Holding

Assuming the 90 days trading horizon Novotek AB is expected to generate 0.71 times more return on investment than Exsitec Holding. However, Novotek AB is 1.42 times less risky than Exsitec Holding. It trades about 0.43 of its potential returns per unit of risk. Exsitec Holding AB is currently generating about -0.1 per unit of risk. If you would invest  6,720  in Novotek AB on October 12, 2024 and sell it today you would earn a total of  740.00  from holding Novotek AB or generate 11.01% return on investment over 90 days.

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

Novotek AB  vs.  Exsitec Holding AB

Novotek AB

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Novotek AB are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Novotek AB sustained solid returns over the last few months and may actually be approaching a breakup point.

Exsitec Holding AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exsitec Holding AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Novotek AB and Exsitec Holding

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

The idea behind Novotek AB and Exsitec Holding AB 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.