Correlation Between Vergnet and Nextedia

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

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

Diversification Opportunities for Vergnet and Nextedia

0.82

Correlation Coefficient

Vergnet  Nextedia

Very poor diversification

The 3 months correlation between Vergnet and Nextedia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Vergnet and Nextedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextedia and Vergnet 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 Vergnet are associated (or correlated) with Nextedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextedia has no effect on the direction of Vergnet i.e., Vergnet and Nextedia go up and down completely randomly.

Pair Corralation between Vergnet and Nextedia

Assuming the 90 days trading horizon Vergnet is expected to under-perform the Nextedia. In addition to that, Vergnet is 1.49 times more volatile than Nextedia. It trades about -0.35 of its total potential returns per unit of risk. Nextedia is currently generating about 0.0 per unit of volatility. If you would invest  44.00  in Nextedia on September 25, 2024 and sell it today you would lose (1.00) from holding Nextedia or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Vergnet  vs.  Nextedia

Vergnet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vergnet has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Nextedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextedia has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Vergnet and Nextedia

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

The idea behind Vergnet and Nextedia 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.