Correlation Between Novotek AB and Mekonomen
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
-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 Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Novotek AB vs. Mekonomen AB
Performance |
Timeline |
Novotek AB |
Mekonomen AB |
Novotek AB and Mekonomen Volatility Contrast
Predicted Return Density |
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.Novotek AB vs. Svenska Aerogel Holding | ||
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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.
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