Correlation Between NextPlat Corp and BASE

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

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

Diversification Opportunities for NextPlat Corp and BASE

0.12

Correlation Coefficient

NextPlat Corp  BASE

Average diversification

The 3 months correlation between NextPlat and BASE is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NextPlat Corp and BASE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BASE Inc and NextPlat Corp 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 NextPlat Corp are associated (or correlated) with BASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BASE Inc has no effect on the direction of NextPlat Corp i.e., NextPlat Corp and BASE go up and down completely randomly.

Pair Corralation between NextPlat Corp and BASE

Assuming the 90 days horizon NextPlat Corp is expected to under-perform the BASE. In addition to that, NextPlat Corp is 3.07 times more volatile than BASE Inc. It trades about -0.04 of its total potential returns per unit of risk. BASE Inc is currently generating about 0.06 per unit of volatility. If you would invest  172.00  in BASE Inc on September 23, 2024 and sell it today you would earn a total of  21.00  from holding BASE Inc or generate 12.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	80.0%
Values	Daily Returns

NextPlat Corp  vs.  BASE Inc

NextPlat Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextPlat Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

BASE Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NextPlat Corp and BASE

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

The idea behind NextPlat Corp and BASE Inc 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.