Correlation Between Noble Financials and Magna Polonia

Can any of the company-specific risk be diversified away by investing in both Noble Financials and Magna Polonia 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 Noble Financials and Magna Polonia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Noble Financials SA and Magna Polonia SA, you can compare the effects of market volatilities on Noble Financials and Magna Polonia 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 Noble Financials with a short position of Magna Polonia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Noble Financials and Magna Polonia.

Diversification Opportunities for Noble Financials and Magna Polonia

0.4

Correlation Coefficient

Noble Financials  Magna Polonia

Very weak diversification

The 3 months correlation between Noble and Magna is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Noble Financials SA and Magna Polonia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Magna Polonia SA and Noble Financials 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 Noble Financials SA are associated (or correlated) with Magna Polonia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Magna Polonia SA has no effect on the direction of Noble Financials i.e., Noble Financials and Magna Polonia go up and down completely randomly.

Pair Corralation between Noble Financials and Magna Polonia

Assuming the 90 days trading horizon Noble Financials SA is expected to generate 1.32 times more return on investment than Magna Polonia. However, Noble Financials is 1.32 times more volatile than Magna Polonia SA. It trades about 0.08 of its potential returns per unit of risk. Magna Polonia SA is currently generating about 0.09 per unit of risk. If you would invest  7,280  in Noble Financials SA on December 21, 2024 and sell it today you would earn a total of  640.00  from holding Noble Financials SA or generate 8.79% return on investment over 90 days.

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

Noble Financials SA  vs.  Magna Polonia SA

Noble Financials

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Noble Financials SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Noble Financials may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Magna Polonia SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Magna Polonia SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Magna Polonia may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Noble Financials and Magna Polonia

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

The idea behind Noble Financials SA and Magna Polonia 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .