Correlation Between Imed Infinity and Nova
Can any of the company-specific risk be diversified away by investing in both Imed Infinity and Nova 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 Imed Infinity and Nova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Imed Infinity Medical Limited and Nova, you can compare the effects of market volatilities on Imed Infinity and Nova 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 Imed Infinity with a short position of Nova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imed Infinity and Nova.
Diversification Opportunities for Imed Infinity and Nova
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Imed and Nova is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Imed Infinity Medical Limited and Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova and Imed Infinity 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 Imed Infinity Medical Limited are associated (or correlated) with Nova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova has no effect on the direction of Imed Infinity i.e., Imed Infinity and Nova go up and down completely randomly.
Pair Corralation between Imed Infinity and Nova
Assuming the 90 days trading horizon Imed Infinity Medical Limited is expected to under-perform the Nova. But the stock apears to be less risky and, when comparing its historical volatility, Imed Infinity Medical Limited is 2.02 times less risky than Nova. The stock trades about -0.25 of its potential returns per unit of risk. The Nova is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 7,020,000 in Nova on September 1, 2024 and sell it today you would lose (505,000) from holding Nova or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Imed Infinity Medical Limited vs. Nova
Performance |
| Timeline |
| Imed Infinity Medical |
| Nova |
Imed Infinity and Nova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Imed Infinity and Nova
The main advantage of trading using opposite Imed Infinity and Nova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imed Infinity position performs unexpectedly, Nova 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 Nova will offset losses from the drop in Nova's long position.| Imed Infinity vs. ICL Israel Chemicals | Imed Infinity vs. Abra Information Technologies | Imed Infinity vs. Dan Hotels | Imed Infinity vs. Altshuler Shaham Financial |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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