Correlation Between Novo Nordisk and Agat Ejendomme

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

Diversification Opportunities for Novo Nordisk and Agat Ejendomme

-0.49

Correlation Coefficient

Novo Nordisk  Agat Ejendomme

Very good diversification

The 3 months correlation between Novo and Agat is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and Agat Ejendomme AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agat Ejendomme 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 Agat Ejendomme. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agat Ejendomme AS has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and Agat Ejendomme go up and down completely randomly.

Pair Corralation between Novo Nordisk and Agat Ejendomme

Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 0.8 times more return on investment than Agat Ejendomme. However, Novo Nordisk AS is 1.24 times less risky than Agat Ejendomme. It trades about -0.07 of its potential returns per unit of risk. Agat Ejendomme AS is currently generating about -0.09 per unit of risk. If you would invest  87,160  in Novo Nordisk AS on February 7, 2024 and sell it today you would lose (2,020) from holding Novo Nordisk AS or give up 2.32% of portfolio value over 90 days.

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

Novo Nordisk AS  vs.  Agat Ejendomme AS

Novo Nordisk AS

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Novo Nordisk AS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Novo Nordisk is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Agat Ejendomme AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agat Ejendomme AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Agat Ejendomme is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Novo Nordisk and Agat Ejendomme

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

The idea behind Novo Nordisk AS and Agat Ejendomme 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.