Correlation Between Nova Lifestyle and Northann Corp
Can any of the company-specific risk be diversified away by investing in both Nova Lifestyle and Northann Corp 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 Lifestyle and Northann Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Lifestyle I and Northann Corp, you can compare the effects of market volatilities on Nova Lifestyle and Northann Corp 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 Lifestyle with a short position of Northann Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Lifestyle and Northann Corp.
Diversification Opportunities for Nova Lifestyle and Northann Corp
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nova and Northann is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Nova Lifestyle I and Northann Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northann Corp and Nova Lifestyle 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 Lifestyle I are associated (or correlated) with Northann Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northann Corp has no effect on the direction of Nova Lifestyle i.e., Nova Lifestyle and Northann Corp go up and down completely randomly.
Pair Corralation between Nova Lifestyle and Northann Corp
Given the investment horizon of 90 days Nova Lifestyle I is expected to under-perform the Northann Corp. But the stock apears to be less risky and, when comparing its historical volatility, Nova Lifestyle I is 2.09 times less risky than Northann Corp. The stock trades about -0.39 of its potential returns per unit of risk. The Northann Corp is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 21.00 in Northann Corp on August 28, 2024 and sell it today you would earn a total of 7.00 from holding Northann Corp or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Lifestyle I vs. Northann Corp
Performance |
| Timeline |
| Nova Lifestyle I |
| Northann Corp |
Nova Lifestyle and Northann Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Lifestyle and Northann Corp
The main advantage of trading using opposite Nova Lifestyle and Northann Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Lifestyle position performs unexpectedly, Northann Corp 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 Northann Corp will offset losses from the drop in Northann Corp's long position.The idea behind Nova Lifestyle I and Northann Corp 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.| Northann Corp vs. WiMi Hologram Cloud | Northann Corp vs. Weibo Corp | Northann Corp vs. Iridium Communications | Northann Corp vs. Nextplat Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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