Correlation Between UF Games and Novavis Group
Can any of the company-specific risk be diversified away by investing in both UF Games 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 UF Games and Novavis Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UF Games SA and Novavis Group SA, you can compare the effects of market volatilities on UF Games 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 UF Games with a short position of Novavis Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of UF Games and Novavis Group.
Diversification Opportunities for UF Games and Novavis Group
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between UFG and Novavis is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding UF Games SA 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 UF Games 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 UF Games SA 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 UF Games i.e., UF Games and Novavis Group go up and down completely randomly.
Pair Corralation between UF Games and Novavis Group
Assuming the 90 days trading horizon UF Games SA is expected to under-perform the Novavis Group. But the stock apears to be less risky and, when comparing its historical volatility, UF Games SA is 1.03 times less risky than Novavis Group. The stock trades about -0.11 of its potential returns per unit of risk. The Novavis Group SA is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 209.00 in Novavis Group SA on August 29, 2024 and sell it today you would lose (42.00) from holding Novavis Group SA or give up 20.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 67.46% |
| Values | Daily Returns |
UF Games SA vs. Novavis Group SA
Performance |
| Timeline |
| UF Games SA |
| Novavis Group SA |
UF Games and Novavis Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UF Games and Novavis Group
The main advantage of trading using opposite UF Games and Novavis Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UF Games 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.| UF Games vs. Banco Santander SA | UF Games vs. UniCredit SpA | UF Games vs. CEZ as | UF Games vs. Polski Koncern Naftowy |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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