Correlation Between Nova Leap and Aesthetic Medical
Can any of the company-specific risk be diversified away by investing in both Nova Leap and Aesthetic Medical 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 Leap and Aesthetic Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Leap Health and Aesthetic Medical Intl, you can compare the effects of market volatilities on Nova Leap and Aesthetic Medical 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 Leap with a short position of Aesthetic Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Leap and Aesthetic Medical.
Diversification Opportunities for Nova Leap and Aesthetic Medical
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Nova and Aesthetic is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nova Leap Health and Aesthetic Medical Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aesthetic Medical Intl and Nova Leap 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 Leap Health are associated (or correlated) with Aesthetic Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aesthetic Medical Intl has no effect on the direction of Nova Leap i.e., Nova Leap and Aesthetic Medical go up and down completely randomly.
Pair Corralation between Nova Leap and Aesthetic Medical
Assuming the 90 days horizon Nova Leap is expected to generate 1.0 times less return on investment than Aesthetic Medical. But when comparing it to its historical volatility, Nova Leap Health is 1.27 times less risky than Aesthetic Medical. It trades about 0.03 of its potential returns per unit of risk. Aesthetic Medical Intl is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 122.00 in Aesthetic Medical Intl on August 29, 2024 and sell it today you would lose (90.00) from holding Aesthetic Medical Intl or give up 73.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 82.22% |
| Values | Daily Returns |
Nova Leap Health vs. Aesthetic Medical Intl
Performance |
| Timeline |
| Nova Leap Health |
| Aesthetic Medical Intl |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nova Leap and Aesthetic Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Leap and Aesthetic Medical
The main advantage of trading using opposite Nova Leap and Aesthetic Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Leap position performs unexpectedly, Aesthetic Medical 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 Aesthetic Medical will offset losses from the drop in Aesthetic Medical's long position.The idea behind Nova Leap Health and Aesthetic Medical Intl 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.| Aesthetic Medical vs. Jack Nathan Medical | Aesthetic Medical vs. Medical Facilities | Aesthetic Medical vs. Fresenius SE Co | Aesthetic Medical vs. Ramsay Health Care |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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