Correlation Between Barloworld and NOVA VISION

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

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

Diversification Opportunities for Barloworld and NOVA VISION

0.0

Correlation Coefficient

Barloworld  NOVA VISION

Pay attention - limited upside

The 3 months correlation between Barloworld and NOVA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR 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 Barloworld 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 Barloworld Ltd ADR 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 Barloworld i.e., Barloworld and NOVA VISION go up and down completely randomly.

Pair Corralation between Barloworld and NOVA VISION

If you would invest (100.00) in NOVA VISION ACQUISITION on December 30, 2024 and sell it today you would earn a total of  100.00  from holding NOVA VISION ACQUISITION or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Barloworld Ltd ADR  vs.  NOVA VISION ACQUISITION

Barloworld ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Barloworld is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NOVA VISION ACQUISITION

Risk-Adjusted Performance

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 Barloworld and NOVA VISION

The main advantage of trading using opposite Barloworld and NOVA VISION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld 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 Barloworld Ltd ADR 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .