Correlation Between Broad Capital and NOVA VISION

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

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

Diversification Opportunities for Broad Capital and NOVA VISION

0.15

Correlation Coefficient

Broad Capital  NOVA VISION

Average diversification

The 3 months correlation between Broad and NOVA is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Broad Capital Acquisition and NOVA VISION ACQUISITION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVA VISION ACQUISITION and Broad Capital 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 Broad Capital Acquisition are associated (or correlated) with NOVA VISION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVA VISION ACQUISITION has no effect on the direction of Broad Capital i.e., Broad Capital and NOVA VISION go up and down completely randomly.

Pair Corralation between Broad Capital and NOVA VISION

Assuming the 90 days horizon Broad Capital is expected to generate 16.36 times less return on investment than NOVA VISION. But when comparing it to its historical volatility, Broad Capital Acquisition is 10.65 times less risky than NOVA VISION. It trades about 0.03 of its potential returns per unit of risk. NOVA VISION ACQUISITION is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,062  in NOVA VISION ACQUISITION on October 25, 2024 and sell it today you would earn a total of  2,638  from holding NOVA VISION ACQUISITION or generate 248.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.1%
Values	Daily Returns

Broad Capital Acquisition  vs.  NOVA VISION ACQUISITION

Broad Capital Acquisition

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Broad Capital Acquisition are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Broad Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NOVA VISION ACQUISITION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOVA VISION ACQUISITION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NOVA VISION is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Broad Capital and NOVA VISION

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

The idea behind Broad Capital Acquisition and NOVA VISION ACQUISITION 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.