Correlation Between Nova and Orbit Technologies
Can any of the company-specific risk be diversified away by investing in both Nova and Orbit Technologies 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 Orbit Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova and Orbit Technologies, you can compare the effects of market volatilities on Nova and Orbit Technologies 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 Orbit Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova and Orbit Technologies.
Diversification Opportunities for Nova and Orbit Technologies
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nova and Orbit is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nova and Orbit Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit Technologies 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 Orbit Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit Technologies has no effect on the direction of Nova i.e., Nova and Orbit Technologies go up and down completely randomly.
Pair Corralation between Nova and Orbit Technologies
Assuming the 90 days trading horizon Nova is expected to under-perform the Orbit Technologies. In addition to that, Nova is 1.75 times more volatile than Orbit Technologies. It trades about -0.14 of its total potential returns per unit of risk. Orbit Technologies is currently generating about 0.29 per unit of volatility. If you would invest 249,300 in Orbit Technologies on August 29, 2024 and sell it today you would earn a total of 26,800 from holding Orbit Technologies or generate 10.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova vs. Orbit Technologies
Performance |
| Timeline |
| Nova |
| Orbit Technologies |
Nova and Orbit Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova and Orbit Technologies
The main advantage of trading using opposite Nova and Orbit Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova position performs unexpectedly, Orbit Technologies 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 Orbit Technologies will offset losses from the drop in Orbit Technologies' long position.The idea behind Nova and Orbit Technologies 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.| Orbit Technologies vs. Ormat Technologies | Orbit Technologies vs. Multi Retail Group | Orbit Technologies vs. Nova | Orbit Technologies vs. B Communications |
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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