Correlation Between Marine Products and NOVARTIS

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

By analyzing existing cross correlation between Marine Products and NOVARTIS CAP P, you can compare the effects of market volatilities on Marine Products and NOVARTIS 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 Marine Products with a short position of NOVARTIS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Products and NOVARTIS.

Diversification Opportunities for Marine Products and NOVARTIS

0.02

Correlation Coefficient

Marine Products  NOVARTIS

Significant diversification

The 3 months correlation between Marine and NOVARTIS is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and NOVARTIS CAP P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVARTIS CAP P and Marine Products 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 Marine Products are associated (or correlated) with NOVARTIS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVARTIS CAP P has no effect on the direction of Marine Products i.e., Marine Products and NOVARTIS go up and down completely randomly.

Pair Corralation between Marine Products and NOVARTIS

Considering the 90-day investment horizon Marine Products is expected to under-perform the NOVARTIS. In addition to that, Marine Products is 2.21 times more volatile than NOVARTIS CAP P. It trades about -0.05 of its total potential returns per unit of risk. NOVARTIS CAP P is currently generating about 0.14 per unit of volatility. If you would invest  8,728  in NOVARTIS CAP P on December 23, 2024 and sell it today you would earn a total of  683.00  from holding NOVARTIS CAP P or generate 7.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Marine Products  vs.  NOVARTIS CAP P

Marine Products

Risk-Adjusted Performance

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating 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.

NOVARTIS CAP P

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NOVARTIS CAP P are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NOVARTIS may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Marine Products and NOVARTIS

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

The idea behind Marine Products and NOVARTIS CAP P 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.