Correlation Between NovAccess Global and NewAmsterdam Pharma

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

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

Diversification Opportunities for NovAccess Global and NewAmsterdam Pharma

-0.02

Correlation Coefficient

NovAccess Global  NewAmsterdam Pharma

Good diversification

The 3 months correlation between NovAccess and NewAmsterdam is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding NovAccess Global and NewAmsterdam Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewAmsterdam Pharma and NovAccess Global 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 NovAccess Global are associated (or correlated) with NewAmsterdam Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewAmsterdam Pharma has no effect on the direction of NovAccess Global i.e., NovAccess Global and NewAmsterdam Pharma go up and down completely randomly.

Pair Corralation between NovAccess Global and NewAmsterdam Pharma

Given the investment horizon of 90 days NovAccess Global is expected to generate 1.54 times less return on investment than NewAmsterdam Pharma. In addition to that, NovAccess Global is 2.25 times more volatile than NewAmsterdam Pharma. It trades about 0.03 of its total potential returns per unit of risk. NewAmsterdam Pharma is currently generating about 0.09 per unit of volatility. If you would invest  741.00  in NewAmsterdam Pharma on December 4, 2024 and sell it today you would earn a total of  319.00  from holding NewAmsterdam Pharma or generate 43.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

NovAccess Global  vs.  NewAmsterdam Pharma

NovAccess Global

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NovAccess Global are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, NovAccess Global showed solid returns over the last few months and may actually be approaching a breakup point.

NewAmsterdam Pharma

Risk-Adjusted Performance

OK

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

Pair Trading with NovAccess Global and NewAmsterdam Pharma

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

The idea behind NovAccess Global and NewAmsterdam Pharma 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.