Correlation Between Novo Integrated and BIOLASE

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

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

Diversification Opportunities for Novo Integrated and BIOLASE

-0.35

Correlation Coefficient

Novo Integrated  BIOLASE

Very good diversification

The 3 months correlation between Novo and BIOLASE is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Novo Integrated Sciences and BIOLASE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIOLASE and Novo Integrated 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 Integrated Sciences are associated (or correlated) with BIOLASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIOLASE has no effect on the direction of Novo Integrated i.e., Novo Integrated and BIOLASE go up and down completely randomly.

Pair Corralation between Novo Integrated and BIOLASE

Given the investment horizon of 90 days Novo Integrated Sciences is expected to generate 0.83 times more return on investment than BIOLASE. However, Novo Integrated Sciences is 1.2 times less risky than BIOLASE. It trades about -0.08 of its potential returns per unit of risk. BIOLASE is currently generating about -0.11 per unit of risk. If you would invest  159.00  in Novo Integrated Sciences on February 21, 2024 and sell it today you would lose (111.27) from holding Novo Integrated Sciences or give up 69.98% of portfolio value over 90 days.

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

Novo Integrated Sciences  vs.  BIOLASE

Novo Integrated Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Novo Integrated Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

BIOLASE

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIOLASE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, BIOLASE disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Novo Integrated and BIOLASE

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

The idea behind Novo Integrated Sciences and BIOLASE 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..