Correlation Between Novanta and Know Labs

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

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

Diversification Opportunities for Novanta and Know Labs

0.84

Correlation Coefficient

Novanta  Know Labs

Very poor diversification

The 3 months correlation between Novanta and Know is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Novanta and Know Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Know Labs and Novanta 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 Novanta are associated (or correlated) with Know Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Know Labs has no effect on the direction of Novanta i.e., Novanta and Know Labs go up and down completely randomly.

Pair Corralation between Novanta and Know Labs

Given the investment horizon of 90 days Novanta is expected to generate 0.09 times more return on investment than Know Labs. However, Novanta is 11.56 times less risky than Know Labs. It trades about -0.14 of its potential returns per unit of risk. Know Labs is currently generating about -0.1 per unit of risk. If you would invest  15,229  in Novanta on December 28, 2024 and sell it today you would lose (1,976) from holding Novanta or give up 12.98% of portfolio value over 90 days.

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

Novanta  vs.  Know Labs

Novanta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Novanta has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Know Labs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Know Labs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Novanta and Know Labs

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

The idea behind Novanta and Know Labs 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..