Correlation Between Nouveau Life and EGF Theramed
Can any of the company-specific risk be diversified away by investing in both Nouveau Life and EGF Theramed 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 Nouveau Life and EGF Theramed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nouveau Life Pharmaceuticals and EGF Theramed Health, you can compare the effects of market volatilities on Nouveau Life and EGF Theramed 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 Nouveau Life with a short position of EGF Theramed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nouveau Life and EGF Theramed.
Diversification Opportunities for Nouveau Life and EGF Theramed
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nouveau and EGF is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nouveau Life Pharmaceuticals and EGF Theramed Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EGF Theramed Health and Nouveau Life 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 Nouveau Life Pharmaceuticals are associated (or correlated) with EGF Theramed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EGF Theramed Health has no effect on the direction of Nouveau Life i.e., Nouveau Life and EGF Theramed go up and down completely randomly.
Pair Corralation between Nouveau Life and EGF Theramed
Given the investment horizon of 90 days Nouveau Life Pharmaceuticals is expected to generate 1.64 times more return on investment than EGF Theramed. However, Nouveau Life is 1.64 times more volatile than EGF Theramed Health. It trades about 0.09 of its potential returns per unit of risk. EGF Theramed Health is currently generating about 0.06 per unit of risk. If you would invest 0.04 in Nouveau Life Pharmaceuticals on August 27, 2024 and sell it today you would lose (0.03) from holding Nouveau Life Pharmaceuticals or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nouveau Life Pharmaceuticals vs. EGF Theramed Health
Performance |
| Timeline |
| Nouveau Life Pharmac |
| EGF Theramed Health |
Nouveau Life and EGF Theramed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nouveau Life and EGF Theramed
The main advantage of trading using opposite Nouveau Life and EGF Theramed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nouveau Life position performs unexpectedly, EGF Theramed 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 EGF Theramed will offset losses from the drop in EGF Theramed's long position.| Nouveau Life vs. Absolute Health and | Nouveau Life vs. China Health Management | Nouveau Life vs. Embrace Change Acquisition | Nouveau Life vs. TransAKT |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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