Correlation Between Clean Carbon and Novita SA
Can any of the company-specific risk be diversified away by investing in both Clean Carbon and Novita SA 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 Clean Carbon and Novita SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Clean Carbon Energy and Novita SA, you can compare the effects of market volatilities on Clean Carbon and Novita SA 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 Clean Carbon with a short position of Novita SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Clean Carbon and Novita SA.
Diversification Opportunities for Clean Carbon and Novita SA
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Clean and Novita is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Clean Carbon Energy and Novita SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novita SA and Clean Carbon 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 Clean Carbon Energy are associated (or correlated) with Novita SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novita SA has no effect on the direction of Clean Carbon i.e., Clean Carbon and Novita SA go up and down completely randomly.
Pair Corralation between Clean Carbon and Novita SA
Assuming the 90 days trading horizon Clean Carbon is expected to generate 3.41 times less return on investment than Novita SA. In addition to that, Clean Carbon is 1.36 times more volatile than Novita SA. It trades about 0.01 of its total potential returns per unit of risk. Novita SA is currently generating about 0.04 per unit of volatility. If you would invest 7,405 in Novita SA on September 19, 2024 and sell it today you would earn a total of 4,095 from holding Novita SA or generate 55.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Clean Carbon Energy vs. Novita SA
Performance |
| Timeline |
| Clean Carbon Energy |
| Novita SA |
Clean Carbon and Novita SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Clean Carbon and Novita SA
The main advantage of trading using opposite Clean Carbon and Novita SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Clean Carbon position performs unexpectedly, Novita SA 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 Novita SA will offset losses from the drop in Novita SA's long position.| Clean Carbon vs. Asseco Business Solutions | Clean Carbon vs. Asseco South Eastern | Clean Carbon vs. HM Inwest SA | Clean Carbon vs. Movie Games SA |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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