Correlation Between Nova Europe and Esfera Robotics

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

By analyzing existing cross correlation between Nova Europe ISR and Esfera Robotics R, you can compare the effects of market volatilities on Nova Europe and Esfera Robotics 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 Europe with a short position of Esfera Robotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Europe and Esfera Robotics.

Diversification Opportunities for Nova Europe and Esfera Robotics

-0.84

Correlation Coefficient

Nova Europe  Esfera Robotics

Pay attention - limited upside

The 3 months correlation between Nova and Esfera is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Nova Europe ISR and Esfera Robotics R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esfera Robotics R and Nova Europe 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 Europe ISR are associated (or correlated) with Esfera Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esfera Robotics R has no effect on the direction of Nova Europe i.e., Nova Europe and Esfera Robotics go up and down completely randomly.

Pair Corralation between Nova Europe and Esfera Robotics

Assuming the 90 days trading horizon Nova Europe ISR is expected to generate 0.59 times more return on investment than Esfera Robotics. However, Nova Europe ISR is 1.7 times less risky than Esfera Robotics. It trades about 0.08 of its potential returns per unit of risk. Esfera Robotics R is currently generating about -0.03 per unit of risk. If you would invest  20,991  in Nova Europe ISR on September 22, 2024 and sell it today you would earn a total of  234.00  from holding Nova Europe ISR or generate 1.11% return on investment over 90 days.

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

Nova Europe ISR  vs.  Esfera Robotics R

Nova Europe ISR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nova Europe ISR has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong basic indicators, Nova Europe is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Esfera Robotics R

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Esfera Robotics R are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat fragile basic indicators, Esfera Robotics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nova Europe and Esfera Robotics

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

The idea behind Nova Europe ISR and Esfera Robotics R 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.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.