Correlation Between Novavis Group and UniCredit SpA

Can any of the company-specific risk be diversified away by investing in both Novavis Group and UniCredit SpA 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 UniCredit SpA 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 UniCredit SpA, you can compare the effects of market volatilities on Novavis Group and UniCredit SpA 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 UniCredit SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novavis Group and UniCredit SpA.

Diversification Opportunities for Novavis Group and UniCredit SpA

-0.69

Correlation Coefficient

Novavis Group  UniCredit SpA

Excellent diversification

The 3 months correlation between Novavis and UniCredit is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Novavis Group SA and UniCredit SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UniCredit SpA 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 UniCredit SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UniCredit SpA has no effect on the direction of Novavis Group i.e., Novavis Group and UniCredit SpA go up and down completely randomly.

Pair Corralation between Novavis Group and UniCredit SpA

Assuming the 90 days trading horizon Novavis Group SA is expected to under-perform the UniCredit SpA. But the stock apears to be less risky and, when comparing its historical volatility, Novavis Group SA is 1.28 times less risky than UniCredit SpA. The stock trades about -0.18 of its potential returns per unit of risk. The UniCredit SpA is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  15,739  in UniCredit SpA on August 31, 2024 and sell it today you would lose (197.00) from holding UniCredit SpA or give up 1.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.16%
Values	Daily Returns

Novavis Group SA  vs.  UniCredit SpA

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 December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

UniCredit SpA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UniCredit SpA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, UniCredit SpA 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 UniCredit SpA

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

The idea behind Novavis Group SA and UniCredit SpA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.