Correlation Between Intrasense and Novacyt

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

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

Diversification Opportunities for Intrasense and Novacyt

0.07

Correlation Coefficient

Intrasense  Novacyt

Significant diversification

The 3 months correlation between Intrasense and Novacyt is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Intrasense and Novacyt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novacyt and Intrasense 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 Intrasense are associated (or correlated) with Novacyt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novacyt has no effect on the direction of Intrasense i.e., Intrasense and Novacyt go up and down completely randomly.

Pair Corralation between Intrasense and Novacyt

Assuming the 90 days trading horizon Intrasense is expected to under-perform the Novacyt. But the stock apears to be less risky and, when comparing its historical volatility, Intrasense is 1.5 times less risky than Novacyt. The stock trades about -0.05 of its potential returns per unit of risk. The Novacyt is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  58.00  in Novacyt on November 29, 2024 and sell it today you would earn a total of  2.00  from holding Novacyt or generate 3.45% return on investment over 90 days.

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

Intrasense  vs.  Novacyt

Intrasense

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intrasense has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Novacyt

Risk-Adjusted Performance

Weak

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

Pair Trading with Intrasense and Novacyt

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

The idea behind Intrasense and Novacyt 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.