Correlation Between New Tech and Novavis Group
Can any of the company-specific risk be diversified away by investing in both New Tech 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 New Tech and Novavis Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Tech Capital and Novavis Group SA, you can compare the effects of market volatilities on New Tech 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 New Tech with a short position of Novavis Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Tech and Novavis Group.
Diversification Opportunities for New Tech and Novavis Group
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Novavis is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Capital 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 New Tech 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 New Tech Capital 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 New Tech i.e., New Tech and Novavis Group go up and down completely randomly.
Pair Corralation between New Tech and Novavis Group
Assuming the 90 days trading horizon New Tech is expected to generate 1.21 times less return on investment than Novavis Group. But when comparing it to its historical volatility, New Tech Capital is 1.36 times less risky than Novavis Group. It trades about 0.17 of its potential returns per unit of risk. Novavis Group SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 117.00 in Novavis Group SA on October 24, 2024 and sell it today you would earn a total of 13.00 from holding Novavis Group SA or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Tech Capital vs. Novavis Group SA
Performance |
| Timeline |
| New Tech Capital |
| Novavis Group SA |
New Tech and Novavis Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Tech and Novavis Group
The main advantage of trading using opposite New Tech and Novavis Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Tech 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.| New Tech vs. Igoria Trade SA | New Tech vs. Ultimate Games SA | New Tech vs. Medicalg | New Tech vs. SOFTWARE MANSION SPOLKA |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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