Correlation Between Ceragon Networks and Novation Hldgs

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

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

Diversification Opportunities for Ceragon Networks and Novation Hldgs

0.0

Correlation Coefficient

Ceragon Networks  Novation Hldgs

Pay attention - limited upside

The 3 months correlation between Ceragon and Novation is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Ceragon Networks and Novation Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Novation Hldgs and Ceragon Networks 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 Ceragon Networks are associated (or correlated) with Novation Hldgs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Novation Hldgs has no effect on the direction of Ceragon Networks i.e., Ceragon Networks and Novation Hldgs go up and down completely randomly.

Pair Corralation between Ceragon Networks and Novation Hldgs

If you would invest  242.00  in Ceragon Networks on September 5, 2024 and sell it today you would earn a total of  195.00  from holding Ceragon Networks or generate 80.58% return on investment over 90 days.

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

Ceragon Networks  vs.  Novation Hldgs

Ceragon Networks

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ceragon Networks are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Ceragon Networks unveiled solid returns over the last few months and may actually be approaching a breakup point.

Novation Hldgs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novation Hldgs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ceragon Networks and Novation Hldgs

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

The idea behind Ceragon Networks and Novation Hldgs 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 Anywhere module to track or share privately all of your investments from the convenience of any device.