Correlation Between WT Offshore and Nova Vision

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

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

Diversification Opportunities for WT Offshore and Nova Vision

0.0

Correlation Coefficient

WT Offshore  Nova Vision

Pay attention - limited upside

The 3 months correlation between WTI and Nova is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WT Offshore 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 WT Offshore 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 WT Offshore 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 WT Offshore i.e., WT Offshore and Nova Vision go up and down completely randomly.

Pair Corralation between WT Offshore and Nova Vision

Considering the 90-day investment horizon WT Offshore is expected to under-perform the Nova Vision. But the stock apears to be less risky and, when comparing its historical volatility, WT Offshore is 4.34 times less risky than Nova Vision. The stock trades about -0.06 of its potential returns per unit of risk. The 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	Flat
Strength	Insignificant
Accuracy	94.76%
Values	Daily Returns

WT Offshore  vs.  Nova Vision Acquisition

WT Offshore

Risk-Adjusted Performance

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Very Weak

Over the last 90 days WT Offshore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, WT Offshore is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

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 WT Offshore and Nova Vision

The main advantage of trading using opposite WT Offshore and Nova Vision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WT Offshore 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 WT Offshore 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..