Correlation Between Home Invest and Nextensa

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

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

Diversification Opportunities for Home Invest and Nextensa

0.74

Correlation Coefficient

Home Invest  Nextensa

Poor diversification

The 3 months correlation between Home and Nextensa is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Home Invest Belgium and Nextensa NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextensa NV and Home Invest 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 Home Invest Belgium are associated (or correlated) with Nextensa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextensa NV has no effect on the direction of Home Invest i.e., Home Invest and Nextensa go up and down completely randomly.

Pair Corralation between Home Invest and Nextensa

Assuming the 90 days trading horizon Home Invest Belgium is expected to generate 1.27 times more return on investment than Nextensa. However, Home Invest is 1.27 times more volatile than Nextensa NV. It trades about -0.15 of its potential returns per unit of risk. Nextensa NV is currently generating about -0.22 per unit of risk. If you would invest  1,896  in Home Invest Belgium on September 23, 2024 and sell it today you would lose (298.00) from holding Home Invest Belgium or give up 15.72% of portfolio value over 90 days.

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

Home Invest Belgium  vs.  Nextensa NV

Home Invest Belgium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home Invest Belgium 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.

Nextensa NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextensa NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Home Invest and Nextensa

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

The idea behind Home Invest Belgium and Nextensa NV 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.