Correlation Between Novacyt SA and Cerus

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

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

Diversification Opportunities for Novacyt SA and Cerus

-0.04

Correlation Coefficient

Novacyt SA  Cerus

Good diversification

The 3 months correlation between Novacyt and Cerus is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Novacyt SA and Cerus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cerus and Novacyt SA 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 SA are associated (or correlated) with Cerus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cerus has no effect on the direction of Novacyt SA i.e., Novacyt SA and Cerus go up and down completely randomly.

Pair Corralation between Novacyt SA and Cerus

Assuming the 90 days horizon Novacyt SA is expected to under-perform the Cerus. In addition to that, Novacyt SA is 1.08 times more volatile than Cerus. It trades about -0.11 of its total potential returns per unit of risk. Cerus is currently generating about -0.02 per unit of volatility. If you would invest  178.00  in Cerus on September 21, 2024 and sell it today you would lose (20.00) from holding Cerus or give up 11.24% of portfolio value over 90 days.

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

Novacyt SA  vs.  Cerus

Novacyt SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novacyt SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Cerus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cerus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cerus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Novacyt SA and Cerus

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

The idea behind Novacyt SA and Cerus 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.