Correlation Between Nova Wellness and Awanbiru Technology

Can any of the company-specific risk be diversified away by investing in both Nova Wellness and Awanbiru Technology 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 Wellness and Awanbiru Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nova Wellness Group and Awanbiru Technology Bhd, you can compare the effects of market volatilities on Nova Wellness and Awanbiru Technology 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 Wellness with a short position of Awanbiru Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Wellness and Awanbiru Technology.

Diversification Opportunities for Nova Wellness and Awanbiru Technology

-0.27

Correlation Coefficient

Nova Wellness  Awanbiru Technology

Very good diversification

The 3 months correlation between Nova and Awanbiru is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nova Wellness Group and Awanbiru Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Awanbiru Technology Bhd and Nova Wellness 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 Wellness Group are associated (or correlated) with Awanbiru Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Awanbiru Technology Bhd has no effect on the direction of Nova Wellness i.e., Nova Wellness and Awanbiru Technology go up and down completely randomly.

Pair Corralation between Nova Wellness and Awanbiru Technology

Assuming the 90 days trading horizon Nova Wellness is expected to generate 13.66 times less return on investment than Awanbiru Technology. But when comparing it to its historical volatility, Nova Wellness Group is 2.3 times less risky than Awanbiru Technology. It trades about 0.01 of its potential returns per unit of risk. Awanbiru Technology Bhd is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Awanbiru Technology Bhd on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Awanbiru Technology Bhd or generate 2.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nova Wellness Group  vs.  Awanbiru Technology Bhd

Nova Wellness Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Wellness Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Nova Wellness is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Awanbiru Technology Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Awanbiru Technology Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Awanbiru Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nova Wellness and Awanbiru Technology

The main advantage of trading using opposite Nova Wellness and Awanbiru Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Wellness position performs unexpectedly, Awanbiru Technology 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 Awanbiru Technology will offset losses from the drop in Awanbiru Technology's long position.

The idea behind Nova Wellness Group and Awanbiru Technology Bhd 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.