Correlation Between Optivision Technology and Nova Technology

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

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

Diversification Opportunities for Optivision Technology and Nova Technology

-0.47

Correlation Coefficient

Optivision Technology  Nova Technology

Very good diversification

The 3 months correlation between Optivision and Nova is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Optivision Technology and Nova Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Technology and Optivision Technology 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 Optivision Technology are associated (or correlated) with Nova Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Technology has no effect on the direction of Optivision Technology i.e., Optivision Technology and Nova Technology go up and down completely randomly.

Pair Corralation between Optivision Technology and Nova Technology

Assuming the 90 days trading horizon Optivision Technology is expected to under-perform the Nova Technology. But the stock apears to be less risky and, when comparing its historical volatility, Optivision Technology is 1.16 times less risky than Nova Technology. The stock trades about -0.2 of its potential returns per unit of risk. The Nova Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  18,900  in Nova Technology on August 30, 2024 and sell it today you would lose (250.00) from holding Nova Technology or give up 1.32% of portfolio value over 90 days.

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

Optivision Technology  vs.  Nova Technology

Optivision Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Optivision Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Nova Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nova Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nova Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Optivision Technology and Nova Technology

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

The idea behind Optivision Technology and Nova Technology 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.