Correlation Between Century Therapeutics and NovaBay Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Century Therapeutics and NovaBay Pharmaceuticals 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 Century Therapeutics and NovaBay Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Therapeutics and NovaBay Pharmaceuticals, you can compare the effects of market volatilities on Century Therapeutics and NovaBay Pharmaceuticals 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 Century Therapeutics with a short position of NovaBay Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Therapeutics and NovaBay Pharmaceuticals.
Diversification Opportunities for Century Therapeutics and NovaBay Pharmaceuticals
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Century and NovaBay is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Century Therapeutics and NovaBay Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NovaBay Pharmaceuticals and Century Therapeutics 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 Century Therapeutics are associated (or correlated) with NovaBay Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NovaBay Pharmaceuticals has no effect on the direction of Century Therapeutics i.e., Century Therapeutics and NovaBay Pharmaceuticals go up and down completely randomly.
Pair Corralation between Century Therapeutics and NovaBay Pharmaceuticals
Given the investment horizon of 90 days Century Therapeutics is expected to under-perform the NovaBay Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Century Therapeutics is 1.16 times less risky than NovaBay Pharmaceuticals. The stock trades about -0.09 of its potential returns per unit of risk. The NovaBay Pharmaceuticals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 71.00 in NovaBay Pharmaceuticals on August 25, 2024 and sell it today you would lose (3.00) from holding NovaBay Pharmaceuticals or give up 4.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Therapeutics vs. NovaBay Pharmaceuticals
Performance |
| Timeline |
| Century Therapeutics |
| NovaBay Pharmaceuticals |
Century Therapeutics and NovaBay Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Therapeutics and NovaBay Pharmaceuticals
The main advantage of trading using opposite Century Therapeutics and NovaBay Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Therapeutics position performs unexpectedly, NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals will offset losses from the drop in NovaBay Pharmaceuticals' long position.| Century Therapeutics vs. Eliem Therapeutics | Century Therapeutics vs. HCW Biologics | Century Therapeutics vs. Scpharmaceuticals | Century Therapeutics vs. Milestone Pharmaceuticals |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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