Correlation Between NextSource Materials and Primaris Retail

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

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

Diversification Opportunities for NextSource Materials and Primaris Retail

-0.19

Correlation Coefficient

NextSource Materials  Primaris Retail

Good diversification

The 3 months correlation between NextSource and Primaris is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Primaris Retail RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primaris Retail RE and NextSource Materials 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 NextSource Materials are associated (or correlated) with Primaris Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primaris Retail RE has no effect on the direction of NextSource Materials i.e., NextSource Materials and Primaris Retail go up and down completely randomly.

Pair Corralation between NextSource Materials and Primaris Retail

Assuming the 90 days trading horizon NextSource Materials is expected to generate about the same return on investment as Primaris Retail RE. However, NextSource Materials is 4.5 times more volatile than Primaris Retail RE. It trades about 0.01 of its potential returns per unit of risk. Primaris Retail RE is currently producing about 0.03 per unit of risk. If you would invest  1,597  in Primaris Retail RE on September 14, 2024 and sell it today you would earn a total of  18.00  from holding Primaris Retail RE or generate 1.13% return on investment over 90 days.

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

NextSource Materials  vs.  Primaris Retail RE

NextSource Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextSource Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, NextSource Materials is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Primaris Retail RE

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Primaris Retail RE are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Primaris Retail is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NextSource Materials and Primaris Retail

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

The idea behind NextSource Materials and Primaris Retail RE 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 CEOs Directory module to screen CEOs from public companies around the world.