Correlation Between NexGel Warrant and Iveda Solutions

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

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

Diversification Opportunities for NexGel Warrant and Iveda Solutions

0.36

Correlation Coefficient

NexGel Warrant  Iveda Solutions

Weak diversification

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

Pair Corralation between NexGel Warrant and Iveda Solutions

Assuming the 90 days horizon NexGel Warrant is expected to generate 1.34 times more return on investment than Iveda Solutions. However, NexGel Warrant is 1.34 times more volatile than Iveda Solutions. It trades about 0.05 of its potential returns per unit of risk. Iveda Solutions is currently generating about -0.03 per unit of risk. If you would invest  49.00  in NexGel Warrant on September 5, 2024 and sell it today you would lose (1.00) from holding NexGel Warrant or give up 2.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	79.69%
Values	Daily Returns

NexGel Warrant  vs.  Iveda Solutions

NexGel Warrant

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NexGel Warrant are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, NexGel Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

Iveda Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iveda Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's fundamental 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.

Pair Trading with NexGel Warrant and Iveda Solutions

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

The idea behind NexGel Warrant and Iveda Solutions 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.