Correlation Between MCI Management and Novina SA
Can any of the company-specific risk be diversified away by investing in both MCI Management 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 MCI Management and Novina SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCI Management SA and Novina SA, you can compare the effects of market volatilities on MCI Management 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 MCI Management with a short position of Novina SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCI Management and Novina SA.
Diversification Opportunities for MCI Management and Novina SA
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MCI and Novina is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MCI Management SA and Novina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novina SA and MCI Management 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 MCI Management 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 MCI Management i.e., MCI Management and Novina SA go up and down completely randomly.
Pair Corralation between MCI Management and Novina SA
Assuming the 90 days trading horizon MCI Management SA is expected to generate 0.33 times more return on investment than Novina SA. However, MCI Management SA is 3.06 times less risky than Novina SA. It trades about 0.1 of its potential returns per unit of risk. Novina SA is currently generating about -0.11 per unit of risk. If you would invest 2,510 in MCI Management SA on August 28, 2024 and sell it today you would earn a total of 60.00 from holding MCI Management SA or generate 2.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MCI Management SA vs. Novina SA
Performance |
| Timeline |
| MCI Management SA |
| Novina SA |
MCI Management and Novina SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCI Management and Novina SA
The main advantage of trading using opposite MCI Management and Novina SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCI Management 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 MCI Management SA 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. Play2Chill SA | Novina SA vs. MCI Management SA | Novina SA vs. Igoria Trade SA | Novina SA vs. Noble Financials 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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