Correlation Between RF Acquisition and NOVA VISION

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

By analyzing existing cross correlation between RF Acquisition Corp and NOVA VISION ACQUISITION, you can compare the effects of market volatilities on RF Acquisition and NOVA VISION 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 RF Acquisition with a short position of NOVA VISION. Check out your portfolio center. Please also check ongoing floating volatility patterns of RF Acquisition and NOVA VISION.

Diversification Opportunities for RF Acquisition and NOVA VISION

-0.63

Correlation Coefficient

RF Acquisition  NOVA VISION

Excellent diversification

The 3 months correlation between RFAIR and NOVA is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding RF Acquisition Corp and NOVA VISION ACQUISITION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOVA VISION ACQUISITION and RF Acquisition 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 RF Acquisition Corp are associated (or correlated) with NOVA VISION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOVA VISION ACQUISITION has no effect on the direction of RF Acquisition i.e., RF Acquisition and NOVA VISION go up and down completely randomly.

Pair Corralation between RF Acquisition and NOVA VISION

Assuming the 90 days horizon RF Acquisition is expected to generate 2.19 times less return on investment than NOVA VISION. In addition to that, RF Acquisition is 1.17 times more volatile than NOVA VISION ACQUISITION. It trades about 0.02 of its total potential returns per unit of risk. NOVA VISION ACQUISITION is currently generating about 0.05 per unit of volatility. If you would invest  1,059  in NOVA VISION ACQUISITION on October 10, 2024 and sell it today you would earn a total of  2,641  from holding NOVA VISION ACQUISITION or generate 249.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	21.06%
Values	Daily Returns

RF Acquisition Corp  vs.  NOVA VISION ACQUISITION

RF Acquisition Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RF Acquisition Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, RF Acquisition is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

NOVA VISION ACQUISITION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NOVA VISION ACQUISITION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NOVA VISION is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with RF Acquisition and NOVA VISION

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

The idea behind RF Acquisition Corp and NOVA VISION ACQUISITION 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..