Correlation Between Pexip Holding and Napatech

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

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

Diversification Opportunities for Pexip Holding and Napatech

-0.89

Correlation Coefficient

Pexip Holding  Napatech

Pay attention - limited upside

The 3 months correlation between Pexip and Napatech is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pexip Holding ASA and Napatech AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Napatech AS and Pexip Holding 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 Pexip Holding ASA are associated (or correlated) with Napatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Napatech AS has no effect on the direction of Pexip Holding i.e., Pexip Holding and Napatech go up and down completely randomly.

Pair Corralation between Pexip Holding and Napatech

Assuming the 90 days trading horizon Pexip Holding ASA is expected to generate 0.65 times more return on investment than Napatech. However, Pexip Holding ASA is 1.54 times less risky than Napatech. It trades about 0.2 of its potential returns per unit of risk. Napatech AS is currently generating about -0.19 per unit of risk. If you would invest  3,715  in Pexip Holding ASA on September 16, 2024 and sell it today you would earn a total of  885.00  from holding Pexip Holding ASA or generate 23.82% return on investment over 90 days.

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

Pexip Holding ASA  vs.  Napatech AS

Pexip Holding ASA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pexip Holding ASA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Pexip Holding displayed solid returns over the last few months and may actually be approaching a breakup point.

Napatech AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Napatech AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Pexip Holding and Napatech

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

The idea behind Pexip Holding ASA and Napatech AS 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.