Correlation Between Novina SA and Vee SA

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

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

Diversification Opportunities for Novina SA and Vee SA

-0.32

Correlation Coefficient

Novina SA  Vee SA

Very good diversification

The 3 months correlation between Novina and Vee is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Novina SA and Vee SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vee SA 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 Vee SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vee SA has no effect on the direction of Novina SA i.e., Novina SA and Vee SA go up and down completely randomly.

Pair Corralation between Novina SA and Vee SA

Assuming the 90 days trading horizon Novina SA is expected to generate 17.52 times less return on investment than Vee SA. But when comparing it to its historical volatility, Novina SA is 2.15 times less risky than Vee SA. It trades about 0.01 of its potential returns per unit of risk. Vee SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,330  in Vee SA on November 29, 2024 and sell it today you would earn a total of  102.00  from holding Vee SA or generate 7.67% return on investment over 90 days.

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

Novina SA  vs.  Vee SA

Novina SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novina SA has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Vee SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vee SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Vee SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novina SA and Vee SA

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

The idea behind Novina SA and Vee 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.