Correlation Between Nextmart and Sunniva

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

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

Diversification Opportunities for Nextmart and Sunniva

0.0

Correlation Coefficient

Nextmart  Sunniva

Pay attention - limited upside

The 3 months correlation between Nextmart and Sunniva is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nextmart and Sunniva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunniva and Nextmart 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 Nextmart are associated (or correlated) with Sunniva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunniva has no effect on the direction of Nextmart i.e., Nextmart and Sunniva go up and down completely randomly.

Pair Corralation between Nextmart and Sunniva

If you would invest  0.04  in Nextmart on September 24, 2024 and sell it today you would lose (0.03) from holding Nextmart or give up 75.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.92%
Values	Daily Returns

Nextmart  vs.  Sunniva

Nextmart

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nextmart are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Nextmart reported solid returns over the last few months and may actually be approaching a breakup point.

Sunniva

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sunniva has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Sunniva is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nextmart and Sunniva

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

The idea behind Nextmart and Sunniva 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.