Correlation Between Novina SA and Abak SA
Can any of the company-specific risk be diversified away by investing in both Novina SA and Abak 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 Novina SA and Abak SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novina SA and Abak SA, you can compare the effects of market volatilities on Novina SA and Abak 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 Novina SA with a short position of Abak SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novina SA and Abak SA.
Diversification Opportunities for Novina SA and Abak SA
Poor diversification
The 3 months correlation between Novina and Abak is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Novina SA and Abak SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abak SA and Novina 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 Novina SA are associated (or correlated) with Abak SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abak SA has no effect on the direction of Novina SA i.e., Novina SA and Abak SA go up and down completely randomly.
Pair Corralation between Novina SA and Abak SA
Assuming the 90 days trading horizon Novina SA is expected to generate 1.1 times more return on investment than Abak SA. However, Novina SA is 1.1 times more volatile than Abak SA. It trades about -0.15 of its potential returns per unit of risk. Abak SA is currently generating about -0.17 per unit of risk. If you would invest 116.00 in Novina SA on September 19, 2024 and sell it today you would lose (7.00) from holding Novina SA or give up 6.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.91% |
| Values | Daily Returns |
Novina SA vs. Abak SA
Performance |
| Timeline |
| Novina SA |
| Abak SA |
Novina SA and Abak SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novina SA and Abak SA
The main advantage of trading using opposite Novina SA and Abak SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novina SA position performs unexpectedly, Abak 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 Abak SA will offset losses from the drop in Abak SA's long position.| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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