Correlation Between Nextferm Technologies and Willy Food

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

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

Diversification Opportunities for Nextferm Technologies and Willy Food

-0.72

Correlation Coefficient

Nextferm Technologies  Willy Food

Pay attention - limited upside

The 3 months correlation between Nextferm and Willy is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nextferm Technologies and Willy Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Willy Food and Nextferm Technologies 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 Nextferm Technologies are associated (or correlated) with Willy Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Willy Food has no effect on the direction of Nextferm Technologies i.e., Nextferm Technologies and Willy Food go up and down completely randomly.

Pair Corralation between Nextferm Technologies and Willy Food

Assuming the 90 days trading horizon Nextferm Technologies is expected to under-perform the Willy Food. In addition to that, Nextferm Technologies is 2.9 times more volatile than Willy Food. It trades about -0.18 of its total potential returns per unit of risk. Willy Food is currently generating about 0.23 per unit of volatility. If you would invest  198,300  in Willy Food on September 14, 2024 and sell it today you would earn a total of  66,600  from holding Willy Food or generate 33.59% return on investment over 90 days.

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

Nextferm Technologies  vs.  Willy Food

Nextferm Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextferm Technologies 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 basic indicators 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.

Willy Food

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Willy Food are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Willy Food sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nextferm Technologies and Willy Food

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

The idea behind Nextferm Technologies and Willy Food 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.