Correlation Between Novina SA and True Games

Can any of the company-specific risk be diversified away by investing in both Novina SA and True Games 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 Novina SA and True Games into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Novina SA and True Games

-0.71

Correlation Coefficient

Novina SA  True Games

Pay attention - limited upside

The 3 months correlation between Novina and True is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Novina SA and True Games Syndicate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on True Games Syndicate and Novina 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 Novina SA are associated (or correlated) with True Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of True Games Syndicate has no effect on the direction of Novina SA i.e., Novina SA and True Games go up and down completely randomly.

Pair Corralation between Novina SA and True Games

Assuming the 90 days trading horizon Novina SA is expected to generate 9.4 times less return on investment than True Games. But when comparing it to its historical volatility, Novina SA is 1.17 times less risky than True Games. It trades about 0.02 of its potential returns per unit of risk. True Games Syndicate is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  44.00  in True Games Syndicate on December 30, 2024 and sell it today you would earn a total of  10.00  from holding True Games Syndicate or generate 22.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	83.87%
Values	Daily Returns

Novina SA  vs.  True Games Syndicate

Novina SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Novina SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Novina SA is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

True Games Syndicate

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in True Games Syndicate are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, True Games reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novina SA and True Games

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

The idea behind Novina SA and True Games Syndicate 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.