Correlation Between Novation Hldgs and CLST Holdings

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

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

Diversification Opportunities for Novation Hldgs and CLST Holdings

0.0

Correlation Coefficient

Novation Hldgs  CLST Holdings

Pay attention - limited upside

The 3 months correlation between Novation and CLST is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Novation Hldgs and CLST Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CLST Holdings and Novation Hldgs 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 Novation Hldgs are associated (or correlated) with CLST Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CLST Holdings has no effect on the direction of Novation Hldgs i.e., Novation Hldgs and CLST Holdings go up and down completely randomly.

Pair Corralation between Novation Hldgs and CLST Holdings

If you would invest  2.10  in CLST Holdings on December 27, 2024 and sell it today you would earn a total of  2.40  from holding CLST Holdings or generate 114.29% return on investment over 90 days.

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

Novation Hldgs  vs.  CLST Holdings

Novation Hldgs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novation Hldgs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Novation Hldgs is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

CLST Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CLST Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, CLST Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novation Hldgs and CLST Holdings

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

The idea behind Novation Hldgs and CLST Holdings 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.