Correlation Between Novonix and Amprius Technologies

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Can any of the company-specific risk be diversified away by investing in both Novonix and Amprius Technologies 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 Novonix and Amprius Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novonix Ltd ADR and Amprius Technologies, you can compare the effects of market volatilities on Novonix and Amprius Technologies 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 Novonix with a short position of Amprius Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novonix and Amprius Technologies.

Diversification Opportunities for Novonix and Amprius Technologies

  Correlation Coefficient

Average diversification

The 3 months correlation between Novonix and Amprius is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Novonix Ltd ADR and Amprius Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amprius Technologies and Novonix 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 Novonix Ltd ADR are associated (or correlated) with Amprius Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amprius Technologies has no effect on the direction of Novonix i.e., Novonix and Amprius Technologies go up and down completely randomly.

Pair Corralation between Novonix and Amprius Technologies

Considering the 90-day investment horizon Novonix Ltd ADR is expected to generate 0.53 times more return on investment than Amprius Technologies. However, Novonix Ltd ADR is 1.89 times less risky than Amprius Technologies. It trades about -0.21 of its potential returns per unit of risk. Amprius Technologies is currently generating about -0.12 per unit of risk. If you would invest  251.00  in Novonix Ltd ADR on February 29, 2024 and sell it today you would lose (50.00) from holding Novonix Ltd ADR or give up 19.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
ValuesDaily Returns

Novonix Ltd ADR  vs.  Amprius Technologies

Novonix Ltd ADR 

Risk-Adjusted Performance

0 of 100

Very Weak
Over the last 90 days Novonix Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Novonix is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Amprius Technologies 

Risk-Adjusted Performance

0 of 100

Very Weak
Over the last 90 days Amprius Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Novonix and Amprius Technologies Volatility Contrast

   Predicted Return Density   

Pair Trading with Novonix and Amprius Technologies

The main advantage of trading using opposite Novonix and Amprius Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Novonix position performs unexpectedly, Amprius Technologies 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 Amprius Technologies will offset losses from the drop in Amprius Technologies' long position.
The idea behind Novonix Ltd ADR and Amprius Technologies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .

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