Correlation Between Novavis Group and Bank Millennium

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

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

Diversification Opportunities for Novavis Group and Bank Millennium

0.01

Correlation Coefficient

Novavis Group  Bank Millennium

Significant diversification

The 3 months correlation between Novavis and Bank is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Novavis Group SA and Bank Millennium SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Millennium SA and Novavis Group 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 Novavis Group SA are associated (or correlated) with Bank Millennium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Millennium SA has no effect on the direction of Novavis Group i.e., Novavis Group and Bank Millennium go up and down completely randomly.

Pair Corralation between Novavis Group and Bank Millennium

Assuming the 90 days trading horizon Novavis Group SA is expected to under-perform the Bank Millennium. In addition to that, Novavis Group is 1.1 times more volatile than Bank Millennium SA. It trades about -0.26 of its total potential returns per unit of risk. Bank Millennium SA is currently generating about -0.05 per unit of volatility. If you would invest  902.00  in Bank Millennium SA on September 13, 2024 and sell it today you would lose (28.00) from holding Bank Millennium SA or give up 3.1% of portfolio value over 90 days.

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

Novavis Group SA  vs.  Bank Millennium SA

Novavis Group SA

Risk-Adjusted Performance

0 of 100

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 weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Bank Millennium SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Millennium SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Bank Millennium 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 Novavis Group and Bank Millennium

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

The idea behind Novavis Group SA and Bank Millennium 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..