Correlation Between X Trade and Novita SA
Can any of the company-specific risk be diversified away by investing in both X Trade and Novita 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 X Trade and Novita SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Trade Brokers and Novita SA, you can compare the effects of market volatilities on X Trade and Novita 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 X Trade with a short position of Novita SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Trade and Novita SA.
Diversification Opportunities for X Trade and Novita SA
Very poor diversification
The 3 months correlation between XTB and Novita is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding X Trade Brokers and Novita SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novita SA and X Trade 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 X Trade Brokers are associated (or correlated) with Novita SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novita SA has no effect on the direction of X Trade i.e., X Trade and Novita SA go up and down completely randomly.
Pair Corralation between X Trade and Novita SA
Assuming the 90 days trading horizon X Trade Brokers is expected to under-perform the Novita SA. But the stock apears to be less risky and, when comparing its historical volatility, X Trade Brokers is 1.31 times less risky than Novita SA. The stock trades about -0.11 of its potential returns per unit of risk. The Novita SA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 11,538 in Novita SA on September 19, 2024 and sell it today you would lose (38.00) from holding Novita SA or give up 0.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
X Trade Brokers vs. Novita SA
Performance |
| Timeline |
| X Trade Brokers |
| Novita SA |
X Trade and Novita SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Trade and Novita SA
The main advantage of trading using opposite X Trade and Novita SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Trade position performs unexpectedly, Novita 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 Novita SA will offset losses from the drop in Novita SA's long position.The idea behind X Trade Brokers and Novita SA 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.| Novita SA vs. SOFTWARE MANSION SPOLKA | Novita SA vs. Igoria Trade SA | Novita SA vs. X Trade Brokers | Novita SA vs. PZ Cormay 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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