Correlation Between Nextferm Technologies and Nova
Can any of the company-specific risk be diversified away by investing in both Nextferm Technologies and Nova 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 Nextferm Technologies and Nova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextferm Technologies and Nova, you can compare the effects of market volatilities on Nextferm Technologies and Nova 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 Nextferm Technologies with a short position of Nova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextferm Technologies and Nova.
Diversification Opportunities for Nextferm Technologies and Nova
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nextferm and Nova is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nextferm Technologies and Nova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova and Nextferm Technologies 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 Nextferm Technologies are associated (or correlated) with Nova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova has no effect on the direction of Nextferm Technologies i.e., Nextferm Technologies and Nova go up and down completely randomly.
Pair Corralation between Nextferm Technologies and Nova
Assuming the 90 days trading horizon Nextferm Technologies is expected to under-perform the Nova. In addition to that, Nextferm Technologies is 1.95 times more volatile than Nova. It trades about -0.05 of its total potential returns per unit of risk. Nova is currently generating about 0.1 per unit of volatility. If you would invest 3,887,000 in Nova on September 1, 2024 and sell it today you would earn a total of 2,628,000 from holding Nova or generate 67.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextferm Technologies vs. Nova
Performance |
| Timeline |
| Nextferm Technologies |
| Nova |
Nextferm Technologies and Nova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextferm Technologies and Nova
The main advantage of trading using opposite Nextferm Technologies and Nova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextferm Technologies position performs unexpectedly, Nova 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 Nova will offset losses from the drop in Nova's long position.| Nextferm Technologies vs. Neto ME Holdings | Nextferm Technologies vs. Salomon A Angel | Nextferm Technologies vs. Strauss Group | Nextferm Technologies vs. Gan Shmuel |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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