Correlation Between Century Wind and Nova Technology
Can any of the company-specific risk be diversified away by investing in both Century Wind and Nova Technology 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 Century Wind and Nova Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Wind Power and Nova Technology, you can compare the effects of market volatilities on Century Wind and Nova Technology 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 Century Wind with a short position of Nova Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Wind and Nova Technology.
Diversification Opportunities for Century Wind and Nova Technology
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Century and Nova is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Century Wind Power and Nova Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Technology and Century Wind 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 Century Wind Power are associated (or correlated) with Nova Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Technology has no effect on the direction of Century Wind i.e., Century Wind and Nova Technology go up and down completely randomly.
Pair Corralation between Century Wind and Nova Technology
Assuming the 90 days trading horizon Century Wind Power is expected to generate 1.46 times more return on investment than Nova Technology. However, Century Wind is 1.46 times more volatile than Nova Technology. It trades about 0.09 of its potential returns per unit of risk. Nova Technology is currently generating about 0.11 per unit of risk. If you would invest 10,987 in Century Wind Power on September 13, 2024 and sell it today you would earn a total of 19,163 from holding Century Wind Power or generate 174.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Century Wind Power vs. Nova Technology
Performance |
| Timeline |
| Century Wind Power |
| Nova Technology |
Century Wind and Nova Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Wind and Nova Technology
The main advantage of trading using opposite Century Wind and Nova Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Wind position performs unexpectedly, Nova Technology 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 Nova Technology will offset losses from the drop in Nova Technology's long position.| Century Wind vs. Grand Plastic Technology | Century Wind vs. Elan Microelectronics Corp | Century Wind vs. General Plastic Industrial | Century Wind vs. Rafael Microelectronics |
| Nova Technology vs. Highlight Tech | Nova Technology vs. Ruentex Development Co | Nova Technology vs. WiseChip Semiconductor | Nova Technology vs. Novatek Microelectronics Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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