Correlation Between Novacyt and Spineguard

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

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

Diversification Opportunities for Novacyt and Spineguard

-0.7

Correlation Coefficient

Novacyt  Spineguard

Excellent diversification

The 3 months correlation between Novacyt and Spineguard is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Novacyt and Spineguard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spineguard and Novacyt 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 Novacyt are associated (or correlated) with Spineguard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spineguard has no effect on the direction of Novacyt i.e., Novacyt and Spineguard go up and down completely randomly.

Pair Corralation between Novacyt and Spineguard

Assuming the 90 days trading horizon Novacyt is expected to under-perform the Spineguard. But the stock apears to be less risky and, when comparing its historical volatility, Novacyt is 1.8 times less risky than Spineguard. The stock trades about -0.16 of its potential returns per unit of risk. The Spineguard is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  14.00  in Spineguard on September 4, 2024 and sell it today you would earn a total of  10.00  from holding Spineguard or generate 71.43% return on investment over 90 days.

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

Novacyt  vs.  Spineguard

Novacyt

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novacyt has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Spineguard

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spineguard are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Spineguard reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novacyt and Spineguard

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

The idea behind Novacyt and Spineguard 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.