Correlation Between ING Bank and Novina SA
Can any of the company-specific risk be diversified away by investing in both ING Bank 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 ING Bank and Novina SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ING Bank lski and Novina SA, you can compare the effects of market volatilities on ING Bank 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 ING Bank with a short position of Novina SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of ING Bank and Novina SA.
Diversification Opportunities for ING Bank and Novina SA
Good diversification
The 3 months correlation between ING and Novina is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding ING Bank lski and Novina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novina SA and ING Bank 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 ING Bank lski 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 ING Bank i.e., ING Bank and Novina SA go up and down completely randomly.
Pair Corralation between ING Bank and Novina SA
Assuming the 90 days trading horizon ING Bank is expected to generate 3.57 times less return on investment than Novina SA. But when comparing it to its historical volatility, ING Bank lski is 3.68 times less risky than Novina SA. It trades about 0.07 of its potential returns per unit of risk. Novina SA is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 48.00 in Novina SA on August 31, 2024 and sell it today you would earn a total of 67.00 from holding Novina SA or generate 139.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
ING Bank lski vs. Novina SA
Performance |
| Timeline |
| ING Bank lski |
| Novina SA |
ING Bank and Novina SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ING Bank and Novina SA
The main advantage of trading using opposite ING Bank and Novina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ING Bank 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.The idea behind ING Bank lski and Novina SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Novina SA vs. Banco Santander SA | Novina SA vs. UniCredit SpA | Novina SA vs. CEZ as | Novina SA vs. Polski Koncern Naftowy |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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