Correlation Between Novo Resources and International Tower

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

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

Diversification Opportunities for Novo Resources and International Tower

0.73

Correlation Coefficient

Novo Resources  International Tower

Poor diversification

The 3 months correlation between Novo and International is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Novo Resources Corp and International Tower Hill in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Tower Hill and Novo Resources 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 Novo Resources Corp are associated (or correlated) with International Tower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Tower Hill has no effect on the direction of Novo Resources i.e., Novo Resources and International Tower go up and down completely randomly.

Pair Corralation between Novo Resources and International Tower

Assuming the 90 days horizon Novo Resources Corp is expected to under-perform the International Tower. But the otc stock apears to be less risky and, when comparing its historical volatility, Novo Resources Corp is 1.17 times less risky than International Tower. The otc stock trades about -0.03 of its potential returns per unit of risk. The International Tower Hill is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  53.00  in International Tower Hill on September 12, 2024 and sell it today you would lose (5.00) from holding International Tower Hill or give up 9.43% of portfolio value over 90 days.

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

Novo Resources Corp  vs.  International Tower Hill

Novo Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novo Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

International Tower Hill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Tower Hill has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, International Tower is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Novo Resources and International Tower

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

The idea behind Novo Resources Corp and International Tower Hill 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 Commodity Directory module to find actively traded commodities issued by global exchanges.