Correlation Between SOFTWARE MANSION and Novavis Group

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

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

Diversification Opportunities for SOFTWARE MANSION and Novavis Group

0.72

Correlation Coefficient

SOFTWARE MANSION  Novavis Group

Poor diversification

The 3 months correlation between SOFTWARE and Novavis is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding SOFTWARE MANSION SPOLKA and Novavis Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novavis Group SA and SOFTWARE MANSION 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 SOFTWARE MANSION SPOLKA are associated (or correlated) with Novavis Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novavis Group SA has no effect on the direction of SOFTWARE MANSION i.e., SOFTWARE MANSION and Novavis Group go up and down completely randomly.

Pair Corralation between SOFTWARE MANSION and Novavis Group

Assuming the 90 days trading horizon SOFTWARE MANSION SPOLKA is expected to generate 0.77 times more return on investment than Novavis Group. However, SOFTWARE MANSION SPOLKA is 1.29 times less risky than Novavis Group. It trades about 0.06 of its potential returns per unit of risk. Novavis Group SA is currently generating about -0.02 per unit of risk. If you would invest  3,090  in SOFTWARE MANSION SPOLKA on December 2, 2024 and sell it today you would earn a total of  210.00  from holding SOFTWARE MANSION SPOLKA or generate 6.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.67%
Values	Daily Returns

SOFTWARE MANSION SPOLKA  vs.  Novavis Group SA

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SOFTWARE MANSION SPOLKA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, SOFTWARE MANSION may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Novavis Group SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novavis Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Novavis Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SOFTWARE MANSION and Novavis Group

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

The idea behind SOFTWARE MANSION SPOLKA and Novavis Group 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.