Correlation Between Nortech Systems and Tivic Health

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

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

Diversification Opportunities for Nortech Systems and Tivic Health

-0.36

Correlation Coefficient

Nortech Systems  Tivic Health

Very good diversification

The 3 months correlation between Nortech and Tivic is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nortech Systems Incorporated and Tivic Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tivic Health Systems and Nortech Systems 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 Nortech Systems Incorporated are associated (or correlated) with Tivic Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tivic Health Systems has no effect on the direction of Nortech Systems i.e., Nortech Systems and Tivic Health go up and down completely randomly.

Pair Corralation between Nortech Systems and Tivic Health

Given the investment horizon of 90 days Nortech Systems Incorporated is expected to under-perform the Tivic Health. But the stock apears to be less risky and, when comparing its historical volatility, Nortech Systems Incorporated is 4.15 times less risky than Tivic Health. The stock trades about -0.1 of its potential returns per unit of risk. The Tivic Health Systems is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  23.00  in Tivic Health Systems on October 15, 2024 and sell it today you would earn a total of  8.00  from holding Tivic Health Systems or generate 34.78% return on investment over 90 days.

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

Nortech Systems Incorporated  vs.  Tivic Health Systems

Nortech Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nortech Systems Incorporated 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Tivic Health Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tivic Health Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Tivic Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nortech Systems and Tivic Health

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

The idea behind Nortech Systems Incorporated and Tivic Health Systems 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..