Correlation Between Mercator Medical and Novavis Group

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

By analyzing existing cross correlation between Mercator Medical SA and Novavis Group SA, you can compare the effects of market volatilities on Mercator Medical and Novavis Group 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 Mercator Medical with a short position of Novavis Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercator Medical and Novavis Group.

Diversification Opportunities for Mercator Medical and Novavis Group

-0.44

Correlation Coefficient

Mercator Medical  Novavis Group

Very good diversification

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

Pair Corralation between Mercator Medical and Novavis Group

Assuming the 90 days trading horizon Mercator Medical SA is expected to under-perform the Novavis Group. But the stock apears to be less risky and, when comparing its historical volatility, Mercator Medical SA is 1.23 times less risky than Novavis Group. The stock trades about 0.0 of its potential returns per unit of risk. The Novavis Group SA is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  136.00  in Novavis Group SA on December 29, 2024 and sell it today you would earn a total of  39.00  from holding Novavis Group SA or generate 28.68% return on investment over 90 days.

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

Mercator Medical SA  vs.  Novavis Group SA

Mercator Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mercator Medical SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Mercator Medical is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Novavis Group SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Novavis Group SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Novavis Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mercator Medical and Novavis Group

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

The idea behind Mercator Medical SA and Novavis Group SA 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 Anywhere module to track or share privately all of your investments from the convenience of any device.