* Electronegativity: Nitrogen (N) has an electronegativity of 3.0, while hydrogen (H) has an electronegativity of 2.1. The difference in electronegativity is not large enough to create a complete transfer of electrons, which is characteristic of ionic bonds.

* Sharing of electrons: Instead of transferring electrons, nitrogen and hydrogen share electrons to achieve a stable octet configuration. This sharing of electrons forms a covalent bond.

Therefore, the compound formed by nitrogen and hydrogen, ammonia (NH3), is a covalent compound.