Correlation Between Nova Eye and EROAD
Can any of the company-specific risk be diversified away by investing in both Nova Eye and EROAD 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 Eye and EROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Eye Medical and EROAD, you can compare the effects of market volatilities on Nova Eye and EROAD 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 Eye with a short position of EROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Eye and EROAD.
Diversification Opportunities for Nova Eye and EROAD
Poor diversification
The 3 months correlation between Nova and EROAD is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nova Eye Medical and EROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EROAD and Nova Eye 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 Eye Medical are associated (or correlated) with EROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EROAD has no effect on the direction of Nova Eye i.e., Nova Eye and EROAD go up and down completely randomly.
Pair Corralation between Nova Eye and EROAD
Assuming the 90 days trading horizon Nova Eye is expected to generate 4.47 times less return on investment than EROAD. In addition to that, Nova Eye is 1.61 times more volatile than EROAD. It trades about 0.01 of its total potential returns per unit of risk. EROAD is currently generating about 0.04 per unit of volatility. If you would invest 63.00 in EROAD on August 25, 2024 and sell it today you would earn a total of 21.00 from holding EROAD or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Eye Medical vs. EROAD
Performance |
| Timeline |
| Nova Eye Medical |
| EROAD |
Nova Eye and EROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Eye and EROAD
The main advantage of trading using opposite Nova Eye and EROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Eye position performs unexpectedly, EROAD 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 EROAD will offset losses from the drop in EROAD's long position.| Nova Eye vs. Aneka Tambang Tbk | Nova Eye vs. BHP Group Limited | Nova Eye vs. Rio Tinto | Nova Eye vs. Macquarie Group Ltd |
| EROAD vs. Microequities Asset Management | EROAD vs. National Australia Bank | EROAD vs. Perpetual Credit Income | EROAD vs. Queste Communications |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |