Correlation Between NOVATECH and Ecopro BM
Can any of the company-specific risk be diversified away by investing in both NOVATECH and Ecopro BM 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 NOVATECH and Ecopro BM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOVATECH Co and Ecopro BM Co, you can compare the effects of market volatilities on NOVATECH and Ecopro BM 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 NOVATECH with a short position of Ecopro BM. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVATECH and Ecopro BM.
Diversification Opportunities for NOVATECH and Ecopro BM
Significant diversification
The 3 months correlation between NOVATECH and Ecopro is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NOVATECH Co and Ecopro BM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopro BM and NOVATECH 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 NOVATECH Co are associated (or correlated) with Ecopro BM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopro BM has no effect on the direction of NOVATECH i.e., NOVATECH and Ecopro BM go up and down completely randomly.
Pair Corralation between NOVATECH and Ecopro BM
Assuming the 90 days trading horizon NOVATECH Co is expected to generate 1.22 times more return on investment than Ecopro BM. However, NOVATECH is 1.22 times more volatile than Ecopro BM Co. It trades about 0.22 of its potential returns per unit of risk. Ecopro BM Co is currently generating about 0.02 per unit of risk. If you would invest 1,107,000 in NOVATECH Co on November 18, 2024 and sell it today you would earn a total of 839,000 from holding NOVATECH Co or generate 75.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NOVATECH Co vs. Ecopro BM Co
Performance |
| Timeline |
| NOVATECH |
| Ecopro BM |
NOVATECH and Ecopro BM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOVATECH and Ecopro BM
The main advantage of trading using opposite NOVATECH and Ecopro BM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVATECH position performs unexpectedly, Ecopro BM 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 Ecopro BM will offset losses from the drop in Ecopro BM's long position.| NOVATECH vs. YG Entertainment | NOVATECH vs. Dongil Steel Co | NOVATECH vs. Korea Shipbuilding Offshore | NOVATECH vs. T3 Entertainment Co |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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