Correlation Between Novo Nordisk and Hospital Mater

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

Diversification Opportunities for Novo Nordisk and Hospital Mater

0.3

Correlation Coefficient

Novo Nordisk  Hospital Mater

Weak diversification

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

Pair Corralation between Novo Nordisk and Hospital Mater

Assuming the 90 days trading horizon Novo Nordisk AS is expected to generate 1.52 times more return on investment than Hospital Mater. However, Novo Nordisk is 1.52 times more volatile than Hospital Mater Dei. It trades about -0.08 of its potential returns per unit of risk. Hospital Mater Dei is currently generating about -0.14 per unit of risk. If you would invest  8,503  in Novo Nordisk AS on September 26, 2024 and sell it today you would lose (1,606) from holding Novo Nordisk AS or give up 18.89% of portfolio value over 90 days.

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

Novo Nordisk AS  vs.  Hospital Mater Dei

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. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Hospital Mater Dei

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hospital Mater Dei 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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Novo Nordisk and Hospital Mater

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

The idea behind Novo Nordisk AS and Hospital Mater Dei 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.