Correlation Between Genomma Lab and NOV

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

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

Diversification Opportunities for Genomma Lab and NOV

0.44

Correlation Coefficient

Genomma Lab  NOV

Very weak diversification

The 3 months correlation between Genomma and NOV is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Genomma Lab Internacional and NOV Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOV Inc and Genomma Lab 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 Genomma Lab Internacional are associated (or correlated) with NOV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOV Inc has no effect on the direction of Genomma Lab i.e., Genomma Lab and NOV go up and down completely randomly.

Pair Corralation between Genomma Lab and NOV

Assuming the 90 days trading horizon Genomma Lab Internacional is expected to generate 1.92 times more return on investment than NOV. However, Genomma Lab is 1.92 times more volatile than NOV Inc. It trades about -0.01 of its potential returns per unit of risk. NOV Inc is currently generating about -0.14 per unit of risk. If you would invest  2,539  in Genomma Lab Internacional on December 27, 2024 and sell it today you would lose (68.00) from holding Genomma Lab Internacional or give up 2.68% of portfolio value over 90 days.

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

Genomma Lab Internacional  vs.  NOV Inc

Genomma Lab Internacional

Risk-Adjusted Performance

Very Weak

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

NOV Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NOV Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Genomma Lab and NOV

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

The idea behind Genomma Lab Internacional and NOV Inc 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.