Correlation Between Launch One and NOVA VISION

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

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

Diversification Opportunities for Launch One and NOVA VISION

-0.71

Correlation Coefficient

Launch One  NOVA VISION

Pay attention - limited upside

The 3 months correlation between Launch and NOVA is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Launch One Acquisition 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 Launch One 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 Launch One Acquisition 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 Launch One i.e., Launch One and NOVA VISION go up and down completely randomly.

Pair Corralation between Launch One and NOVA VISION

Assuming the 90 days horizon Launch One Acquisition is expected to generate 1.62 times more return on investment than NOVA VISION. However, Launch One is 1.62 times more volatile than NOVA VISION ACQUISITION. It trades about 0.14 of its potential returns per unit of risk. NOVA VISION ACQUISITION is currently generating about 0.05 per unit of risk. If you would invest  9.00  in Launch One Acquisition on October 10, 2024 and sell it today you would earn a total of  7.00  from holding Launch One Acquisition or generate 77.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	11.28%
Values	Daily Returns

Launch One Acquisition  vs.  NOVA VISION ACQUISITION

Launch One Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Launch One Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Launch One showed solid returns over the last few months and may actually be approaching a breakup point.

NOVA VISION ACQUISITION

Risk-Adjusted Performance

0 of 100

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 Launch One and NOVA VISION

The main advantage of trading using opposite Launch One and NOVA VISION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Launch One 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 Launch One Acquisition 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.