Correlation Between NovaBay Pharmaceuticals and GeoVax Labs

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

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

Diversification Opportunities for NovaBay Pharmaceuticals and GeoVax Labs

-0.55

Correlation Coefficient

NovaBay Pharmaceuticals  GeoVax Labs

Excellent diversification

The 3 months correlation between NovaBay and GeoVax is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding NovaBay Pharmaceuticals and GeoVax Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoVax Labs and NovaBay Pharmaceuticals 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 NovaBay Pharmaceuticals are associated (or correlated) with GeoVax Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoVax Labs has no effect on the direction of NovaBay Pharmaceuticals i.e., NovaBay Pharmaceuticals and GeoVax Labs go up and down completely randomly.

Pair Corralation between NovaBay Pharmaceuticals and GeoVax Labs

Considering the 90-day investment horizon NovaBay Pharmaceuticals is expected to generate 0.75 times more return on investment than GeoVax Labs. However, NovaBay Pharmaceuticals is 1.33 times less risky than GeoVax Labs. It trades about 0.07 of its potential returns per unit of risk. GeoVax Labs is currently generating about -0.04 per unit of risk. If you would invest  48.00  in NovaBay Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of  11.00  from holding NovaBay Pharmaceuticals or generate 22.92% return on investment over 90 days.

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

NovaBay Pharmaceuticals  vs.  GeoVax Labs

NovaBay Pharmaceuticals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NovaBay Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, NovaBay Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

GeoVax Labs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GeoVax Labs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NovaBay Pharmaceuticals and GeoVax Labs

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

The idea behind NovaBay Pharmaceuticals and GeoVax Labs 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.