Correlation Between LPP SA and Novavis Group
Can any of the company-specific risk be diversified away by investing in both LPP SA and Novavis Group 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 LPP SA and Novavis Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LPP SA and Novavis Group SA, you can compare the effects of market volatilities on LPP SA and Novavis Group 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 LPP SA with a short position of Novavis Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of LPP SA and Novavis Group.
Diversification Opportunities for LPP SA and Novavis Group
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between LPP and Novavis is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding LPP SA and Novavis Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavis Group SA and LPP SA 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 LPP SA are associated (or correlated) with Novavis Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavis Group SA has no effect on the direction of LPP SA i.e., LPP SA and Novavis Group go up and down completely randomly.
Pair Corralation between LPP SA and Novavis Group
Assuming the 90 days trading horizon LPP SA is expected to generate 1.74 times more return on investment than Novavis Group. However, LPP SA is 1.74 times more volatile than Novavis Group SA. It trades about 0.0 of its potential returns per unit of risk. Novavis Group SA is currently generating about -0.09 per unit of risk. If you would invest 1,550,000 in LPP SA on August 25, 2024 and sell it today you would lose (13,000) from holding LPP SA or give up 0.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LPP SA vs. Novavis Group SA
Performance |
| Timeline |
| LPP SA |
| Novavis Group SA |
LPP SA and Novavis Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LPP SA and Novavis Group
The main advantage of trading using opposite LPP SA and Novavis Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LPP SA position performs unexpectedly, Novavis Group 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 Novavis Group will offset losses from the drop in Novavis Group's long position.| LPP SA vs. Esotiq Henderson SA | LPP SA vs. Asseco Business Solutions | LPP SA vs. Detalion Games SA | LPP SA vs. Asseco South Eastern |
| Novavis Group vs. Pyramid Games SA | Novavis Group vs. Intersport Polska SA | Novavis Group vs. UF Games SA | Novavis Group vs. Monnari Trade 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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