Correlation Between CM AM and Nova Europe

Can any of the company-specific risk be diversified away by investing in both CM AM and Nova Europe 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 CM AM and Nova Europe into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CM AM Monplus NE and Nova Europe ISR, you can compare the effects of market volatilities on CM AM and Nova Europe 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 CM AM with a short position of Nova Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of CM AM and Nova Europe.

Diversification Opportunities for CM AM and Nova Europe

-0.89

Correlation Coefficient

CM AM  Nova Europe

Pay attention - limited upside

The 3 months correlation between 0P0001F96C and Nova is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding CM AM Monplus NE and Nova Europe ISR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Europe ISR and CM AM 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 CM AM Monplus NE are associated (or correlated) with Nova Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Europe ISR has no effect on the direction of CM AM i.e., CM AM and Nova Europe go up and down completely randomly.

Pair Corralation between CM AM and Nova Europe

Assuming the 90 days trading horizon CM AM Monplus NE is expected to generate 0.02 times more return on investment than Nova Europe. However, CM AM Monplus NE is 61.96 times less risky than Nova Europe. It trades about 1.46 of its potential returns per unit of risk. Nova Europe ISR is currently generating about -0.18 per unit of risk. If you would invest  10,610  in CM AM Monplus NE on October 1, 2024 and sell it today you would earn a total of  20.00  from holding CM AM Monplus NE or generate 0.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CM AM Monplus NE  vs.  Nova Europe ISR

CM AM Monplus

Risk-Adjusted Performance

96 of 100

Market Crasher

Compared to the overall equity markets, risk-adjusted returns on investments in CM AM Monplus NE are ranked lower than 96 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable basic indicators, CM AM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nova Europe ISR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Europe ISR has generated negative risk-adjusted returns adding no value to fund investors. Despite latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with CM AM and Nova Europe

The main advantage of trading using opposite CM AM and Nova Europe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CM AM position performs unexpectedly, Nova Europe 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 Nova Europe will offset losses from the drop in Nova Europe's long position.

The idea behind CM AM Monplus NE and Nova Europe ISR 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.