Correlation Between GM and Novacyt SA
Can any of the company-specific risk be diversified away by investing in both GM and Novacyt SA 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 GM and Novacyt SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Novacyt SA, you can compare the effects of market volatilities on GM and Novacyt SA 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 GM with a short position of Novacyt SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Novacyt SA.
Diversification Opportunities for GM and Novacyt SA
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GM and Novacyt is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Novacyt SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novacyt SA and GM 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 General Motors are associated (or correlated) with Novacyt SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novacyt SA has no effect on the direction of GM i.e., GM and Novacyt SA go up and down completely randomly.
Pair Corralation between GM and Novacyt SA
Allowing for the 90-day total investment horizon GM is expected to generate 2.19 times less return on investment than Novacyt SA. But when comparing it to its historical volatility, General Motors is 2.76 times less risky than Novacyt SA. It trades about 0.05 of its potential returns per unit of risk. Novacyt SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Novacyt SA on December 7, 2024 and sell it today you would earn a total of 10.00 from holding Novacyt SA or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Novacyt SA
Performance |
| Timeline |
| General Motors |
| Novacyt SA |
GM and Novacyt SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Novacyt SA
The main advantage of trading using opposite GM and Novacyt SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, Novacyt SA 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 Novacyt SA will offset losses from the drop in Novacyt SA's long position.The idea behind General Motors and Novacyt SA 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.| Novacyt SA vs. Aethlon Medical | Novacyt SA vs. Bone Biologics Corp | Novacyt SA vs. Tivic Health Systems | Novacyt SA vs. Cytosorbents Crp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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