Correlation Between Nova and Camtek
Can any of the company-specific risk be diversified away by investing in both Nova and Camtek 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 and Camtek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Camtek, you can compare the effects of market volatilities on Nova and Camtek 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 with a short position of Camtek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Camtek.
Diversification Opportunities for Nova and Camtek
Very weak diversification
The 3 months correlation between Nova and Camtek is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Camtek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Camtek and Nova 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 are associated (or correlated) with Camtek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Camtek has no effect on the direction of Nova i.e., Nova and Camtek go up and down completely randomly.
Pair Corralation between Nova and Camtek
Assuming the 90 days trading horizon Nova is expected to generate 1.06 times more return on investment than Camtek. However, Nova is 1.06 times more volatile than Camtek. It trades about -0.13 of its potential returns per unit of risk. Camtek is currently generating about -0.14 per unit of risk. If you would invest 8,251,000 in Nova on August 28, 2024 and sell it today you would lose (1,801,000) from holding Nova or give up 21.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova vs. Camtek
Performance |
| Timeline |
| Nova |
| Camtek |
Nova and Camtek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova and Camtek
The main advantage of trading using opposite Nova and Camtek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova position performs unexpectedly, Camtek 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 Camtek will offset losses from the drop in Camtek's long position.The idea behind Nova and Camtek 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.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 CEOs Directory module to screen CEOs from public companies around the world.
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