Correlation Between Ebr Systems and Nova Eye

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

By analyzing existing cross correlation between Ebr Systems CDR and Nova Eye Medical, you can compare the effects of market volatilities on Ebr Systems and Nova Eye 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 Ebr Systems with a short position of Nova Eye. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ebr Systems and Nova Eye.

Diversification Opportunities for Ebr Systems and Nova Eye

0.34

Correlation Coefficient

Ebr Systems  Nova Eye

Weak diversification

The 3 months correlation between Ebr and Nova is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ebr Systems CDR and Nova Eye Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Eye Medical and Ebr Systems 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 Ebr Systems CDR are associated (or correlated) with Nova Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Eye Medical has no effect on the direction of Ebr Systems i.e., Ebr Systems and Nova Eye go up and down completely randomly.

Pair Corralation between Ebr Systems and Nova Eye

Assuming the 90 days trading horizon Ebr Systems CDR is expected to generate 0.65 times more return on investment than Nova Eye. However, Ebr Systems CDR is 1.53 times less risky than Nova Eye. It trades about 0.07 of its potential returns per unit of risk. Nova Eye Medical is currently generating about 0.02 per unit of risk. If you would invest  57.00  in Ebr Systems CDR on October 10, 2024 and sell it today you would earn a total of  82.00  from holding Ebr Systems CDR or generate 143.86% return on investment over 90 days.

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

Ebr Systems CDR  vs.  Nova Eye Medical

Ebr Systems CDR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ebr Systems CDR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Ebr Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nova Eye Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Eye Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Nova Eye may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ebr Systems and Nova Eye

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

The idea behind Ebr Systems CDR and Nova Eye Medical 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.