Correlation Between Novotek AB and Mekonomen

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Novotek AB and Mekonomen 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 Mekonomen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novotek AB and Mekonomen AB, you can compare the effects of market volatilities on Novotek AB and Mekonomen 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 Mekonomen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novotek AB and Mekonomen.

Diversification Opportunities for Novotek AB and Mekonomen

NovotekMekonomenDiversified AwayNovotekMekonomenDiversified Away100%
-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between Novotek and Mekonomen is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Novotek AB and Mekonomen AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekonomen 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 Mekonomen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekonomen AB has no effect on the direction of Novotek AB i.e., Novotek AB and Mekonomen go up and down completely randomly.

Pair Corralation between Novotek AB and Mekonomen

Assuming the 90 days trading horizon Novotek AB is expected to under-perform the Mekonomen. But the stock apears to be less risky and, when comparing its historical volatility, Novotek AB is 1.74 times less risky than Mekonomen. The stock trades about -0.03 of its potential returns per unit of risk. The Mekonomen AB is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  13,257  in Mekonomen AB on September 14, 2024 and sell it today you would earn a total of  403.00  from holding Mekonomen AB or generate 3.04% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Novotek AB  vs.  Mekonomen AB

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -50510
JavaScript chart by amCharts 3.21.15NTEK-B MEKO
       Timeline  
Novotek AB 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Novotek AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain technical and fundamental indicators, Novotek AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec545658606264666870
Mekonomen AB 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Mekonomen AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Mekonomen is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec125130135140145

Novotek AB and Mekonomen Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-6.15-4.61-3.06-1.520.02571.563.184.86.418.03 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15NTEK-B MEKO
       Returns  

Pair Trading with Novotek AB and Mekonomen

The main advantage of trading using opposite Novotek AB and Mekonomen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novotek AB position performs unexpectedly, Mekonomen 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 Mekonomen will offset losses from the drop in Mekonomen's long position.
The idea behind Novotek AB and Mekonomen 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.
Check out your portfolio center.
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.

Other Complementary Tools

Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Investing Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences


 

Discover investing ideas

Utilize additional investing modules