Correlation Between Novatech Industries and Compagnie

Can any of the company-specific risk be diversified away by investing in both Novatech Industries and Compagnie 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 Compagnie 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 Compagnie du Cambodge, you can compare the effects of market volatilities on Novatech Industries and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novatech Industries and Compagnie.

Diversification Opportunities for Novatech Industries and Compagnie

-0.03

Correlation Coefficient

Novatech Industries  Compagnie

Good diversification

The 3 months correlation between Novatech and Compagnie is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Novatech Industries SA and Compagnie du Cambodge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie du Cambodge 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie du Cambodge has no effect on the direction of Novatech Industries i.e., Novatech Industries and Compagnie go up and down completely randomly.

Pair Corralation between Novatech Industries and Compagnie

If you would invest  9,950  in Compagnie du Cambodge on October 11, 2024 and sell it today you would earn a total of  1,650  from holding Compagnie du Cambodge or generate 16.58% return on investment over 90 days.

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

Novatech Industries SA  vs.  Compagnie du Cambodge

Novatech Industries

Risk-Adjusted Performance

0 of 100

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 relatively invariable basic indicators, Novatech Industries is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Compagnie du Cambodge

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie du Cambodge are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Compagnie sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novatech Industries and Compagnie

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

The idea behind Novatech Industries SA and Compagnie du Cambodge 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.