Correlation Between NOV and Genomma Lab

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

By analyzing existing cross correlation between NOV Inc and Genomma Lab Internacional, you can compare the effects of market volatilities on NOV and Genomma Lab 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 NOV with a short position of Genomma Lab. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOV and Genomma Lab.

Diversification Opportunities for NOV and Genomma Lab

0.44

Correlation Coefficient

NOV  Genomma Lab

Very weak diversification

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

Pair Corralation between NOV and Genomma Lab

Assuming the 90 days trading horizon NOV Inc is expected to under-perform the Genomma Lab. But the stock apears to be less risky and, when comparing its historical volatility, NOV Inc is 1.92 times less risky than Genomma Lab. The stock trades about -0.14 of its potential returns per unit of risk. The Genomma Lab Internacional is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  2,539  in Genomma Lab Internacional on December 27, 2024 and sell it today you would lose (68.00) from holding Genomma Lab Internacional or give up 2.68% of portfolio value over 90 days.

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

NOV Inc  vs.  Genomma Lab Internacional

NOV Inc

Risk-Adjusted Performance

Very Weak

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

Genomma Lab Internacional

Risk-Adjusted Performance

Very Weak

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

Pair Trading with NOV and Genomma Lab

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

The idea behind NOV Inc and Genomma Lab Internacional 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.