Novan Inc currently holds about 14.9
M in cash with (24.78
M) of positive cash flow from operations. This results in cash-per-share (CPS) ratio of 0.61.
On a scale of 0 to 100, Novan holds a
performance score of 10. The company secures a Beta (Market Risk) of 0.0665, which conveys not very significant fluctuations relative to the market. Let's try to break down what Novan's beta means in this case. As returns on the market increase, Novan returns are expected to increase less than the market. However, during the bear market, the loss on holding Novan will be expected to be smaller as well. Although it is vital to follow
Novan Inc price patterns, it is good to be conservative about what you can do with the information regarding equity historical
price patterns. The philosophy towards estimating
future performance of any stock is to evaluate the business as a whole together with its past performance, including all
available fundamental and
technical indicators. We have found twenty-one
technical indicators for Novan, which you can use to evaluate the performance of the firm. Please exercises Novan Inc
jensen alpha and
semi variance to make a quick decision on whether Novan Inc current price movements will revert.
Investing in Novan, just like investing in any other equity instrument, is characterized by a strong risk-return correlation. High risks mean high returns and low risk means lower expected returns. Risk management is the act of identifying and assessing the potential risk and developing strategies to minimize these risks and earn maximum possible profits while holding Novan along with other instruments in the same portfolio. Using conventional
technical analysis and
fundamental analysis to select individual securities into a portfolio complements risk management and adds value to overall investors' investing strategies.
Sophisticated investors, who have witnessed
many market ups and downs, anticipate that the market will even out over time. This tendency of Novan's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Watch out for price decline
Please consider monitoring Novan on a daily basis if you are holding a position in it. Novan is trading at a penny-stock level, and the possibility of delisting is much higher compared to other delisted stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion.
Most exchanges require public instruments, such as Novan stock to be traded above the $1 level to remain listed. If Novan stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.
How important is Novan's Liquidity
Novan
financial leverage refers to using borrowed capital as a funding source to finance Novan Inc ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Novan financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to Novan's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of Novan's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between Novan's total debt and its cash.
Novan Correlation with Peers
Investors in Novan can reduce exposure to individual asset risk by holding a diversified portfolio of assets in addition to a long position in Novan Inc. Diversification will allow for the same portfolio return with reduced risk. The correlation table of Novan and its peers is a two-dimensional matrix that shows the correlation coefficient between pairs of securities Novan is related in some way. The cells in the table are color-coded to highlight significantly positive and negative relationships. Each cell shows the correlation between one pair of equities and can be used to run pair trading strategies or create efficient portfolios with
your current brokerage. Please check
volatility of Novan for more details
Another angle On Novan
Novan appears to be very risky, given 3 months investment horizon.
Novan Inc has Sharpe Ratio of 0.14, which conveys that the firm had 0.14% of return per unit of risk over the last 3 months. Our standpoint towards estimating the volatility of a stock is to use all available market data together with stock-specific
technical indicators that cannot be
diversified away. By analyzing
Novan Inc technical indicators you can presently evaluate if the expected return of 0.99% is justified by implied risk. Please exercise Novan's Downside Deviation of 6.67,
mean deviation of 5.07, and Risk Adjusted Performance of 0.1309 to check out if our risk estimates are consistent with your expectations.
Novan is projected to stay under USD1.39 in March
Semi variance is down to 37.2. It may hint at a possible volatility decline. Novan Inc is displaying above-average volatility over the selected time horizon. Investors should scrutinize Novan Inc independently to ensure intended market timing strategies are aligned with expectations about Novan volatility. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Novan's stock risk against market volatility during both bullish and bearish trends. The higher level of volatility that comes with bear markets can directly impact Novan's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.
Our Final Perspective on Novan
Although few other entities under the biotechnology industry are still a bit expensive, Novan may offer a potential longer-term growth to insiders. With a relatively neutral outlook on the recent economy, it is better to hold off any trading of Novan as the current risk-reward utility is not appealing enough. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to Novan.
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Ellen Johnson is a Member of Macroaxis Editorial Board. Ellen covers public companies in North America, focusing primarily on valuation and volatility. Six years of experience in predictive investment analytics and risk management.
View Profile This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of Novan Inc. Please refer to our
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