Correlation Between NovaBay Pharmaceuticals and Sigilon Therapeutics

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

By analyzing existing cross correlation between NovaBay Pharmaceuticals and Sigilon Therapeutics, you can compare the effects of market volatilities on NovaBay Pharmaceuticals and Sigilon Therapeutics 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 NovaBay Pharmaceuticals with a short position of Sigilon Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NovaBay Pharmaceuticals and Sigilon Therapeutics.

Diversification Opportunities for NovaBay Pharmaceuticals and Sigilon Therapeutics

-0.64

Correlation Coefficient

NovaBay Pharmaceuticals  Sigilon Therapeutics

Excellent diversification

The 3 months correlation between NovaBay and Sigilon is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding NovaBay Pharmaceuticals and Sigilon Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sigilon Therapeutics and NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals are associated (or correlated) with Sigilon Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sigilon Therapeutics has no effect on the direction of NovaBay Pharmaceuticals i.e., NovaBay Pharmaceuticals and Sigilon Therapeutics go up and down completely randomly.

Pair Corralation between NovaBay Pharmaceuticals and Sigilon Therapeutics

If you would invest  2,111  in Sigilon Therapeutics on September 23, 2024 and sell it today you would earn a total of  0.00  from holding Sigilon Therapeutics or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

NovaBay Pharmaceuticals  vs.  Sigilon Therapeutics

NovaBay Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NovaBay Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental drivers remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sigilon Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sigilon Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Sigilon Therapeutics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NovaBay Pharmaceuticals and Sigilon Therapeutics

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

The idea behind NovaBay Pharmaceuticals and Sigilon Therapeutics 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.