Correlation Between Semapa and Novabase SGPS

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

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

Diversification Opportunities for Semapa and Novabase SGPS

0.35

Correlation Coefficient

Semapa  Novabase SGPS

Weak diversification

The 3 months correlation between Semapa and Novabase is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Semapa and Novabase SGPS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novabase SGPS and Semapa 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 Semapa are associated (or correlated) with Novabase SGPS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novabase SGPS has no effect on the direction of Semapa i.e., Semapa and Novabase SGPS go up and down completely randomly.

Pair Corralation between Semapa and Novabase SGPS

Assuming the 90 days trading horizon Semapa is expected to generate 1.89 times less return on investment than Novabase SGPS. But when comparing it to its historical volatility, Semapa is 1.64 times less risky than Novabase SGPS. It trades about 0.14 of its potential returns per unit of risk. Novabase SGPS is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  632.00  in Novabase SGPS on April 22, 2025 and sell it today you would earn a total of  148.00  from holding Novabase SGPS or generate 23.42% return on investment over 90 days.

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

Semapa  vs.  Novabase SGPS

Semapa

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semapa are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, Semapa may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Novabase SGPS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Novabase SGPS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Novabase SGPS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Semapa and Novabase SGPS

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

The idea behind Semapa and Novabase SGPS 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.