Correlation Between Exco Technologies and Nova Leap

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

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

Diversification Opportunities for Exco Technologies and Nova Leap

0.49

Correlation Coefficient

Exco Technologies  Nova Leap

Very weak diversification

The 3 months correlation between Exco and Nova is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Exco Technologies Limited and Nova Leap Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Leap Health and Exco Technologies 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 Exco Technologies Limited are associated (or correlated) with Nova Leap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Leap Health has no effect on the direction of Exco Technologies i.e., Exco Technologies and Nova Leap go up and down completely randomly.

Pair Corralation between Exco Technologies and Nova Leap

Assuming the 90 days trading horizon Exco Technologies Limited is expected to under-perform the Nova Leap. But the stock apears to be less risky and, when comparing its historical volatility, Exco Technologies Limited is 3.4 times less risky than Nova Leap. The stock trades about -0.28 of its potential returns per unit of risk. The Nova Leap Health is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Nova Leap Health on December 20, 2024 and sell it today you would earn a total of  0.00  from holding Nova Leap Health or generate 0.0% return on investment over 90 days.

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

Exco Technologies Limited  vs.  Nova Leap Health

Exco Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exco Technologies Limited 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Nova Leap Health

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Leap Health are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nova Leap may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Exco Technologies and Nova Leap

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

The idea behind Exco Technologies Limited and Nova Leap Health 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.