Correlation Between NextPlat Corp and LifeSpeak

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

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

Diversification Opportunities for NextPlat Corp and LifeSpeak

0.36

Correlation Coefficient

NextPlat Corp  LifeSpeak

Weak diversification

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

Pair Corralation between NextPlat Corp and LifeSpeak

Assuming the 90 days horizon NextPlat Corp is expected to under-perform the LifeSpeak. In addition to that, NextPlat Corp is 3.32 times more volatile than LifeSpeak. It trades about -0.04 of its total potential returns per unit of risk. LifeSpeak is currently generating about -0.03 per unit of volatility. If you would invest  35.00  in LifeSpeak on September 23, 2024 and sell it today you would lose (6.00) from holding LifeSpeak or give up 17.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	78.79%
Values	Daily Returns

NextPlat Corp  vs.  LifeSpeak

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.

LifeSpeak

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LifeSpeak has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with NextPlat Corp and LifeSpeak

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

The idea behind NextPlat Corp and LifeSpeak 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.