Correlation Between Novo Nordisk and ABIVAX Socit

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

Diversification Opportunities for Novo Nordisk and ABIVAX Socit

0.45

Correlation Coefficient

Novo Nordisk  ABIVAX Socit

Very weak diversification

The 3 months correlation between Novo and ABIVAX is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Novo Nordisk AS and ABIVAX Socit Anonyme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABIVAX Socit Anonyme 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 ABIVAX Socit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABIVAX Socit Anonyme has no effect on the direction of Novo Nordisk i.e., Novo Nordisk and ABIVAX Socit go up and down completely randomly.

Pair Corralation between Novo Nordisk and ABIVAX Socit

If you would invest  1,095  in ABIVAX Socit Anonyme on January 20, 2024 and sell it today you would earn a total of  0.00  from holding ABIVAX Socit Anonyme or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Novo Nordisk AS  vs.  ABIVAX Socit Anonyme

Novo Nordisk AS

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Novo Nordisk AS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Novo Nordisk reported solid returns over the last few months and may actually be approaching a breakup point.

ABIVAX Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ABIVAX Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ABIVAX Socit is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Novo Nordisk and ABIVAX Socit

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

The idea behind Novo Nordisk AS and ABIVAX Socit Anonyme 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.