Correlation Between Novo Nordisk and HAVN Life

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

Diversification Opportunities for Novo Nordisk and HAVN Life

-0.3

Correlation Coefficient

Novo Nordisk  HAVN Life

Very good diversification

The 3 months correlation between Novo and HAVN is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and HAVN Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAVN Life Sciences 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 HAVN Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAVN Life Sciences has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and HAVN Life go up and down completely randomly.

Pair Corralation between Novo Nordisk and HAVN Life

Considering the 90-day investment horizon Novo Nordisk AS is expected to under-perform the HAVN Life. But the stock apears to be less risky and, when comparing its historical volatility, Novo Nordisk AS is 46.6 times less risky than HAVN Life. The stock trades about -0.25 of its potential returns per unit of risk. The HAVN Life Sciences is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  0.52  in HAVN Life Sciences on October 11, 2024 and sell it today you would lose (0.42) from holding HAVN Life Sciences or give up 80.77% of portfolio value over 90 days.

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

Novo Nordisk AS  vs.  HAVN Life Sciences

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. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

HAVN Life Sciences

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HAVN Life Sciences are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal essential indicators, HAVN Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novo Nordisk and HAVN Life

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

The idea behind Novo Nordisk AS and HAVN Life Sciences 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..