Correlation Between CVRx and Nortech Systems

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

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

Diversification Opportunities for CVRx and Nortech Systems

-0.73

Correlation Coefficient

CVRx  Nortech Systems

Pay attention - limited upside

The 3 months correlation between CVRx and Nortech is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding CVRx Inc and Nortech Systems Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nortech Systems and CVRx 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 CVRx Inc are associated (or correlated) with Nortech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nortech Systems has no effect on the direction of CVRx i.e., CVRx and Nortech Systems go up and down completely randomly.

Pair Corralation between CVRx and Nortech Systems

Given the investment horizon of 90 days CVRx Inc is expected to under-perform the Nortech Systems. In addition to that, CVRx is 1.3 times more volatile than Nortech Systems Incorporated. It trades about -0.05 of its total potential returns per unit of risk. Nortech Systems Incorporated is currently generating about 0.02 per unit of volatility. If you would invest  1,010  in Nortech Systems Incorporated on October 10, 2024 and sell it today you would earn a total of  9.00  from holding Nortech Systems Incorporated or generate 0.89% return on investment over 90 days.

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

CVRx Inc  vs.  Nortech Systems Incorporated

CVRx Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CVRx Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, CVRx showed solid returns over the last few months and may actually be approaching a breakup point.

Nortech Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nortech Systems Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CVRx and Nortech Systems

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

The idea behind CVRx Inc and Nortech Systems Incorporated 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.