Correlation Between Noble Financials and Novina SA
Can any of the company-specific risk be diversified away by investing in both Noble Financials and Novina 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 Noble Financials and Novina SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Noble Financials SA and Novina SA, you can compare the effects of market volatilities on Noble Financials and Novina 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 Noble Financials with a short position of Novina SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Financials and Novina SA.
Diversification Opportunities for Noble Financials and Novina SA
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Noble and Novina is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Noble Financials SA and Novina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novina SA and Noble Financials 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 Noble Financials SA are associated (or correlated) with Novina SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novina SA has no effect on the direction of Noble Financials i.e., Noble Financials and Novina SA go up and down completely randomly.
Pair Corralation between Noble Financials and Novina SA
Assuming the 90 days trading horizon Noble Financials SA is expected to generate 1.06 times more return on investment than Novina SA. However, Noble Financials is 1.06 times more volatile than Novina SA. It trades about -0.08 of its potential returns per unit of risk. Novina SA is currently generating about -0.19 per unit of risk. If you would invest 9,120 in Noble Financials SA on September 1, 2024 and sell it today you would lose (620.00) from holding Noble Financials SA or give up 6.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Noble Financials SA vs. Novina SA
Performance |
| Timeline |
| Noble Financials |
| Novina SA |
Noble Financials and Novina SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Noble Financials and Novina SA
The main advantage of trading using opposite Noble Financials and Novina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Financials position performs unexpectedly, Novina 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 Novina SA will offset losses from the drop in Novina SA's long position.| Noble Financials vs. Globe Trade Centre | Noble Financials vs. MLP Group SA | Noble Financials vs. Esotiq Henderson SA | Noble Financials vs. Echo Investment SA |
| Novina SA vs. Quantum Software SA | Novina SA vs. Globe Trade Centre | Novina SA vs. Medicofarma Biotech SA | Novina SA vs. LSI Software SA |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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