Correlation Between Nova Wellness and FARM FRESH

Can any of the company-specific risk be diversified away by investing in both Nova Wellness and FARM FRESH 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 FARM FRESH 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 FARM FRESH BERHAD, you can compare the effects of market volatilities on Nova Wellness and FARM FRESH 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 FARM FRESH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Wellness and FARM FRESH.

Diversification Opportunities for Nova Wellness and FARM FRESH

-0.65

Correlation Coefficient

Nova Wellness  FARM FRESH

Excellent diversification

The 3 months correlation between Nova and FARM is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nova Wellness Group and FARM FRESH BERHAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM FRESH BERHAD 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 FARM FRESH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM FRESH BERHAD has no effect on the direction of Nova Wellness i.e., Nova Wellness and FARM FRESH go up and down completely randomly.

Pair Corralation between Nova Wellness and FARM FRESH

Assuming the 90 days trading horizon Nova Wellness Group is expected to under-perform the FARM FRESH. In addition to that, Nova Wellness is 1.61 times more volatile than FARM FRESH BERHAD. It trades about -0.05 of its total potential returns per unit of risk. FARM FRESH BERHAD is currently generating about 0.13 per unit of volatility. If you would invest  161.00  in FARM FRESH BERHAD on August 30, 2024 and sell it today you would earn a total of  18.00  from holding FARM FRESH BERHAD or generate 11.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Nova Wellness Group  vs.  FARM FRESH BERHAD

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 latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

FARM FRESH BERHAD

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FARM FRESH BERHAD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, FARM FRESH may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Nova Wellness and FARM FRESH

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

The idea behind Nova Wellness Group and FARM FRESH BERHAD 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.