Correlation Between Nova Technology and SS Healthcare
Can any of the company-specific risk be diversified away by investing in both Nova Technology and SS Healthcare 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 Nova Technology and SS Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Technology and SS Healthcare Holding, you can compare the effects of market volatilities on Nova Technology and SS Healthcare 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 Nova Technology with a short position of SS Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Technology and SS Healthcare.
Diversification Opportunities for Nova Technology and SS Healthcare
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nova and 4198 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Nova Technology and SS Healthcare Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SS Healthcare Holding and Nova Technology 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 Nova Technology are associated (or correlated) with SS Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SS Healthcare Holding has no effect on the direction of Nova Technology i.e., Nova Technology and SS Healthcare go up and down completely randomly.
Pair Corralation between Nova Technology and SS Healthcare
Assuming the 90 days trading horizon Nova Technology is expected to generate 3.42 times less return on investment than SS Healthcare. But when comparing it to its historical volatility, Nova Technology is 2.72 times less risky than SS Healthcare. It trades about 0.01 of its potential returns per unit of risk. SS Healthcare Holding is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,105 in SS Healthcare Holding on October 11, 2024 and sell it today you would lose (15.00) from holding SS Healthcare Holding or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Technology vs. SS Healthcare Holding
Performance |
| Timeline |
| Nova Technology |
| SS Healthcare Holding |
Nova Technology and SS Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Technology and SS Healthcare
The main advantage of trading using opposite Nova Technology and SS Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Technology position performs unexpectedly, SS Healthcare 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 SS Healthcare will offset losses from the drop in SS Healthcare's long position.| Nova Technology vs. Acter Co | Nova Technology vs. Chicony Electronics Co | Nova Technology vs. Elite Material Co | Nova Technology vs. Chipbond Technology |
| SS Healthcare vs. United Orthopedic | SS Healthcare vs. TTY Biopharm Co | SS Healthcare vs. Apex Biotechnology Corp | SS Healthcare vs. Information Technology Total |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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