Correlation Between Novan and LINGYI ITECH

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Novan and LINGYI ITECH 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 Novan and LINGYI ITECH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Novan Inc and LINGYI ITECH GUAN, you can compare the effects of market volatilities on Novan and LINGYI ITECH 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 Novan with a short position of LINGYI ITECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Novan and LINGYI ITECH.

Diversification Opportunities for Novan and LINGYI ITECH

0.36
  Correlation Coefficient

Weak diversification

The 3 months correlation between Novan and LINGYI is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Novan Inc and LINGYI ITECH GUAN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LINGYI ITECH GUAN and Novan 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 Novan Inc are associated (or correlated) with LINGYI ITECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LINGYI ITECH GUAN has no effect on the direction of Novan i.e., Novan and LINGYI ITECH go up and down completely randomly.

Pair Corralation between Novan and LINGYI ITECH

Given the investment horizon of 90 days Novan Inc is expected to generate 1.04 times more return on investment than LINGYI ITECH. However, Novan is 1.04 times more volatile than LINGYI ITECH GUAN. It trades about 0.32 of its potential returns per unit of risk. LINGYI ITECH GUAN is currently generating about 0.19 per unit of risk. If you would invest  243.00  in Novan Inc on May 19, 2022 and sell it today you would earn a total of  58.00  from holding Novan Inc or generate 23.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy82.61%
ValuesDaily Returns

Novan Inc  vs.  LINGYI ITECH GUAN

 Performance (%) 
       Timeline  
Novan Inc 
Novan Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Novan Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Novan is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Novan Price Channel

LINGYI ITECH GUAN 
LINGYI Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in LINGYI ITECH GUAN are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, LINGYI ITECH sustained solid returns over the last few months and may actually be approaching a breakup point.

LINGYI Price Channel

Novan and LINGYI ITECH Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Novan and LINGYI ITECH

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

Novan Inc

Pair trading matchups for Novan

The idea behind Novan Inc and LINGYI ITECH GUAN 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.

LINGYI ITECH GUAN

Pair trading matchups for LINGYI ITECH

Invesco Solar vs. LINGYI ITECH
Salesforce vs. LINGYI ITECH
Stryker Corp vs. LINGYI ITECH
Zimmer Biomet vs. LINGYI ITECH
Johnson Johnson vs. LINGYI ITECH
Main Street vs. LINGYI ITECH
ConocoPhillips vs. LINGYI ITECH
Dupont Denemours vs. LINGYI ITECH
Citigroup vs. LINGYI ITECH
Alphabet vs. LINGYI ITECH
Goldman Sachs vs. LINGYI ITECH
Sentinelone Inc vs. LINGYI ITECH
The effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against LINGYI ITECH as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. LINGYI ITECH's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, LINGYI ITECH's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to LINGYI ITECH GUAN.
Check out your portfolio center. 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 Focused Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.

Other Complementary Tools

Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Go
Pair Correlation
Compare performance and examine fundamental relationship between any two equity instruments
Go
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Go
Piotroski F Score
Get Piotroski F Score based on binary analysis strategy of nine different fundamentals
Go
Insider Screener
Find insiders across different sectors to evaluate their impact on performance
Go
Alpha Finder
Use alpha and beta coefficients to find investment opportunities after accounting for the risk
Go
Watchlist Optimization
Optimize watchlists to build efficient portfolio or rebalance existing positions based on mean-variance optimization algorithm
Go
Focused Opportunities
Build portfolios using our predefined set of ideas and optimize them against your investing preferences
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go
Shere Portfolio
Track or share privately all of your investments from the convenience of any device
Go
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Go
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Go