Correlation Between NOVAREX CoLtd and Raphas

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

By analyzing existing cross correlation between NOVAREX CoLtd and Raphas Co, you can compare the effects of market volatilities on NOVAREX CoLtd and Raphas 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 NOVAREX CoLtd with a short position of Raphas. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVAREX CoLtd and Raphas.

Diversification Opportunities for NOVAREX CoLtd and Raphas

0.61

Correlation Coefficient

NOVAREX CoLtd  Raphas

Poor diversification

The 3 months correlation between NOVAREX and Raphas is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding NOVAREX CoLtd and Raphas Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raphas and NOVAREX CoLtd 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 NOVAREX CoLtd are associated (or correlated) with Raphas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raphas has no effect on the direction of NOVAREX CoLtd i.e., NOVAREX CoLtd and Raphas go up and down completely randomly.

Pair Corralation between NOVAREX CoLtd and Raphas

Assuming the 90 days trading horizon NOVAREX CoLtd is expected to generate 1.08 times less return on investment than Raphas. But when comparing it to its historical volatility, NOVAREX CoLtd is 2.02 times less risky than Raphas. It trades about 0.51 of its potential returns per unit of risk. Raphas Co is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  1,435,000  in Raphas Co on October 9, 2024 and sell it today you would earn a total of  244,000  from holding Raphas Co or generate 17.0% return on investment over 90 days.

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

NOVAREX CoLtd  vs.  Raphas Co

NOVAREX CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOVAREX CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Raphas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Raphas Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NOVAREX CoLtd and Raphas

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

The idea behind NOVAREX CoLtd and Raphas Co 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.