Correlation Between NOVATECH and APro
Can any of the company-specific risk be diversified away by investing in both NOVATECH and APro 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 NOVATECH and APro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOVATECH Co and APro Co, you can compare the effects of market volatilities on NOVATECH and APro 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 NOVATECH with a short position of APro. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVATECH and APro.
Diversification Opportunities for NOVATECH and APro
Excellent diversification
The 3 months correlation between NOVATECH and APro is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding NOVATECH Co and APro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APro and NOVATECH 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 NOVATECH Co are associated (or correlated) with APro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APro has no effect on the direction of NOVATECH i.e., NOVATECH and APro go up and down completely randomly.
Pair Corralation between NOVATECH and APro
Assuming the 90 days trading horizon NOVATECH Co is expected to generate 1.34 times more return on investment than APro. However, NOVATECH is 1.34 times more volatile than APro Co. It trades about 0.0 of its potential returns per unit of risk. APro Co is currently generating about -0.15 per unit of risk. If you would invest 2,235,000 in NOVATECH Co on November 8, 2024 and sell it today you would lose (215,000) from holding NOVATECH Co or give up 9.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.16% |
| Values | Daily Returns |
NOVATECH Co vs. APro Co
Performance |
| Timeline |
| NOVATECH |
| APro |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NOVATECH and APro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NOVATECH and APro
The main advantage of trading using opposite NOVATECH and APro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVATECH position performs unexpectedly, APro 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 APro will offset losses from the drop in APro's long position.| NOVATECH vs. Daewoo Engineering Construction | NOVATECH vs. WooDeumGee Farm Co, | NOVATECH vs. KEPCO Engineering Construction | NOVATECH vs. Infinitt Healthcare Co |
| APro vs. A Tech Solution Co | APro vs. Moonbae Steel | APro vs. Samhyun Steel Co | APro vs. Narae Nanotech Corp |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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