Correlation Between Novita SA and Tower Investments
Can any of the company-specific risk be diversified away by investing in both Novita SA and Tower Investments 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 Novita SA and Tower Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novita SA and Tower Investments SA, you can compare the effects of market volatilities on Novita SA and Tower Investments 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 Novita SA with a short position of Tower Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novita SA and Tower Investments.
Diversification Opportunities for Novita SA and Tower Investments
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Novita and Tower is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Novita SA and Tower Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tower Investments and Novita 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 Novita SA are associated (or correlated) with Tower Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tower Investments has no effect on the direction of Novita SA i.e., Novita SA and Tower Investments go up and down completely randomly.
Pair Corralation between Novita SA and Tower Investments
Assuming the 90 days trading horizon Novita SA is expected to generate 0.4 times more return on investment than Tower Investments. However, Novita SA is 2.5 times less risky than Tower Investments. It trades about 0.33 of its potential returns per unit of risk. Tower Investments SA is currently generating about -0.04 per unit of risk. If you would invest 11,200 in Novita SA on September 1, 2024 and sell it today you would earn a total of 1,200 from holding Novita SA or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Novita SA vs. Tower Investments SA
Performance |
| Timeline |
| Novita SA |
| Tower Investments |
Novita SA and Tower Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Novita SA and Tower Investments
The main advantage of trading using opposite Novita SA and Tower Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novita SA position performs unexpectedly, Tower Investments 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 Tower Investments will offset losses from the drop in Tower Investments' long position.| Novita SA vs. Echo Investment SA | Novita SA vs. Esotiq Henderson SA | Novita SA vs. Asseco South Eastern | Novita SA vs. Vercom SA |
| Tower Investments vs. Asseco Business Solutions | Tower Investments vs. Detalion Games SA | Tower Investments vs. Asseco South Eastern | Tower Investments vs. CFI Holding 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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