Correlation Between Novatech Industries and Entech SE

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

By analyzing existing cross correlation between Novatech Industries SA and Entech SE SAS, you can compare the effects of market volatilities on Novatech Industries and Entech SE 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 Novatech Industries with a short position of Entech SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatech Industries and Entech SE.

Diversification Opportunities for Novatech Industries and Entech SE

-0.65

Correlation Coefficient

Novatech Industries  Entech SE

Excellent diversification

The 3 months correlation between Novatech and Entech is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Novatech Industries SA and Entech SE SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entech SE SAS and Novatech Industries 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 Novatech Industries SA are associated (or correlated) with Entech SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entech SE SAS has no effect on the direction of Novatech Industries i.e., Novatech Industries and Entech SE go up and down completely randomly.

Pair Corralation between Novatech Industries and Entech SE

If you would invest  612.00  in Entech SE SAS on December 4, 2024 and sell it today you would earn a total of  172.00  from holding Entech SE SAS or generate 28.1% return on investment over 90 days.

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

Novatech Industries SA  vs.  Entech SE SAS

Novatech Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novatech Industries SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Entech SE SAS

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Entech SE SAS are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Entech SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novatech Industries and Entech SE

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

The idea behind Novatech Industries SA and Entech SE SAS 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.