Correlation Between Aldel Financial and Nova Vision

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

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

Diversification Opportunities for Aldel Financial and Nova Vision

-0.49

Correlation Coefficient

Aldel Financial  Nova Vision

Very good diversification

The 3 months correlation between Aldel and Nova is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II 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 Aldel Financial 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 Aldel Financial II 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 Aldel Financial i.e., Aldel Financial and Nova Vision go up and down completely randomly.

Pair Corralation between Aldel Financial and Nova Vision

Assuming the 90 days horizon Aldel Financial is expected to generate 170.5 times less return on investment than Nova Vision. But when comparing it to its historical volatility, Aldel Financial II is 131.09 times less risky than Nova Vision. It trades about 0.05 of its potential returns per unit of risk. Nova Vision Acquisition is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,169  in Nova Vision Acquisition on September 13, 2024 and sell it today you would earn a total of  2,931  from holding Nova Vision Acquisition or generate 250.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	15.32%
Values	Daily Returns

Aldel Financial II  vs.  Nova Vision Acquisition

Aldel Financial II

Risk-Adjusted Performance

4 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private 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 comparatively stable basic indicators, Nova Vision is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Aldel Financial and Nova Vision

The main advantage of trading using opposite Aldel Financial and Nova Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial 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 Aldel Financial II 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.