Correlation Between SEB SA and Novacyt
Can any of the company-specific risk be diversified away by investing in both SEB SA and Novacyt 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 SEB SA and Novacyt into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SEB SA and Novacyt, you can compare the effects of market volatilities on SEB SA and Novacyt 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 SEB SA with a short position of Novacyt. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEB SA and Novacyt.
Diversification Opportunities for SEB SA and Novacyt
Very good diversification
The 3 months correlation between SEB and Novacyt is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SEB SA and Novacyt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novacyt and SEB 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 SEB SA are associated (or correlated) with Novacyt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novacyt has no effect on the direction of SEB SA i.e., SEB SA and Novacyt go up and down completely randomly.
Pair Corralation between SEB SA and Novacyt
Assuming the 90 days horizon SEB SA is expected to generate 0.45 times more return on investment than Novacyt. However, SEB SA is 2.23 times less risky than Novacyt. It trades about -0.18 of its potential returns per unit of risk. Novacyt is currently generating about -0.15 per unit of risk. If you would invest 9,855 in SEB SA on August 28, 2024 and sell it today you would lose (785.00) from holding SEB SA or give up 7.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SEB SA vs. Novacyt
Performance |
| Timeline |
| SEB SA |
| Novacyt |
SEB SA and Novacyt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SEB SA and Novacyt
The main advantage of trading using opposite SEB SA and Novacyt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEB SA position performs unexpectedly, Novacyt 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 Novacyt will offset losses from the drop in Novacyt's long position.The idea behind SEB SA and Novacyt 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.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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