Correlation Between Aesthetic Medical and Nova Leap

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

By analyzing existing cross correlation between Aesthetic Medical Intl and Nova Leap Health, you can compare the effects of market volatilities on Aesthetic Medical and Nova Leap 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 Aesthetic Medical with a short position of Nova Leap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aesthetic Medical and Nova Leap.

Diversification Opportunities for Aesthetic Medical and Nova Leap

0.52

Correlation Coefficient

Aesthetic Medical  Nova Leap

Very weak diversification

The 3 months correlation between Aesthetic and Nova is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Aesthetic Medical Intl and Nova Leap Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Leap Health and Aesthetic Medical 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 Aesthetic Medical Intl are associated (or correlated) with Nova Leap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Leap Health has no effect on the direction of Aesthetic Medical i.e., Aesthetic Medical and Nova Leap go up and down completely randomly.

Pair Corralation between Aesthetic Medical and Nova Leap

If you would invest  17.00  in Nova Leap Health on September 3, 2024 and sell it today you would earn a total of  1.00  from holding Nova Leap Health or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Aesthetic Medical Intl  vs.  Nova Leap Health

Aesthetic Medical Intl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aesthetic Medical Intl has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Aesthetic Medical is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Nova Leap Health

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Leap Health are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Nova Leap reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aesthetic Medical and Nova Leap

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

The idea behind Aesthetic Medical Intl and Nova Leap Health 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.