Correlation Between Neovacs SA and Archos

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

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

Diversification Opportunities for Neovacs SA and Archos

0.41

Correlation Coefficient

Neovacs SA  Archos

Very weak diversification

The 3 months correlation between Neovacs and Archos is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Neovacs SA and Archos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archos and Neovacs SA 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 Neovacs SA are associated (or correlated) with Archos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archos has no effect on the direction of Neovacs SA i.e., Neovacs SA and Archos go up and down completely randomly.

Pair Corralation between Neovacs SA and Archos

Assuming the 90 days trading horizon Neovacs SA is expected to generate 6.57 times more return on investment than Archos. However, Neovacs SA is 6.57 times more volatile than Archos. It trades about 0.03 of its potential returns per unit of risk. Archos is currently generating about -0.05 per unit of risk. If you would invest  0.07  in Neovacs SA on September 3, 2024 and sell it today you would lose (0.05) from holding Neovacs SA or give up 71.43% of portfolio value over 90 days.

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

Neovacs SA  vs.  Archos

Neovacs SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neovacs SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Neovacs SA reported solid returns over the last few months and may actually be approaching a breakup point.

Archos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Archos 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.

Pair Trading with Neovacs SA and Archos

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

The idea behind Neovacs SA and Archos 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.