Correlation Between World Houseware and Nova Vision

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

By analyzing existing cross correlation between World Houseware Limited and Nova Vision Acquisition, you can compare the effects of market volatilities on World Houseware 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 World Houseware with a short position of Nova Vision. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Houseware and Nova Vision.

Diversification Opportunities for World Houseware and Nova Vision

0.0

Correlation Coefficient

World Houseware  Nova Vision

Pay attention - limited upside

The 3 months correlation between World and Nova is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding World Houseware Limited 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 World Houseware 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 World Houseware Limited 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 World Houseware i.e., World Houseware and Nova Vision go up and down completely randomly.

Pair Corralation between World Houseware and Nova Vision

Assuming the 90 days horizon World Houseware is expected to generate 22.62 times less return on investment than Nova Vision. But when comparing it to its historical volatility, World Houseware Limited is 2.39 times less risky than Nova Vision. It trades about 0.01 of its potential returns per unit of risk. Nova Vision Acquisition is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,067  in Nova Vision Acquisition on October 5, 2024 and sell it today you would earn a total of  3,033  from holding Nova Vision Acquisition or generate 284.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.64%
Values	Daily Returns

World Houseware Limited  vs.  Nova Vision Acquisition

World Houseware

Risk-Adjusted Performance

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Very Weak

Over the last 90 days World Houseware Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, World Houseware is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 comparatively stable basic indicators, Nova Vision is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with World Houseware and Nova Vision

The main advantage of trading using opposite World Houseware and Nova Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Houseware 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 World Houseware Limited 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.