Correlation Between Nextplat Corp and Nova Vision

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Can any of the company-specific risk be diversified away by investing in both Nextplat Corp and Nova Vision 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 Nextplat Corp and Nova Vision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextplat Corp and Nova Vision Acquisition, you can compare the effects of market volatilities on Nextplat Corp and Nova Vision 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 Nextplat Corp with a short position of Nova Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextplat Corp and Nova Vision.

Diversification Opportunities for Nextplat Corp and Nova Vision

-0.53
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Nextplat and Nova is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nextplat Corp and Nova Vision Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Vision Acquisition and Nextplat Corp 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 Nextplat Corp are associated (or correlated) with Nova Vision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Vision Acquisition has no effect on the direction of Nextplat Corp i.e., Nextplat Corp and Nova Vision go up and down completely randomly.

Pair Corralation between Nextplat Corp and Nova Vision

Given the investment horizon of 90 days Nextplat Corp is expected to under-perform the Nova Vision. But the stock apears to be less risky and, when comparing its historical volatility, Nextplat Corp is 3.24 times less risky than Nova Vision. The stock trades about -0.04 of its potential returns per unit of risk. The Nova Vision Acquisition is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,169  in Nova Vision Acquisition on September 1, 2024 and sell it today you would earn a total of  2,931  from holding Nova Vision Acquisition or generate 250.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy97.34%
ValuesDaily Returns

Nextplat Corp  vs.  Nova Vision Acquisition

 Performance 
       Timeline  
Nextplat Corp 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Nextplat Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Nova Vision Acquisition 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days Nova Vision Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively fragile basic indicators, Nova Vision unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nextplat Corp and Nova Vision Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nextplat Corp and Nova Vision

The main advantage of trading using opposite Nextplat Corp and Nova Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextplat Corp position performs unexpectedly, Nova Vision 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 Vision will offset losses from the drop in Nova Vision's long position.
The idea behind Nextplat Corp and Nova Vision Acquisition 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.
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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