Correlation Between Rosinbomb and Next Hydrogen

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

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

Diversification Opportunities for Rosinbomb and Next Hydrogen

-0.45

Correlation Coefficient

Rosinbomb  Next Hydrogen

Very good diversification

The 3 months correlation between Rosinbomb and Next is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Rosinbomb and Next Hydrogen Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Hydrogen Solutions and Rosinbomb 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 Rosinbomb are associated (or correlated) with Next Hydrogen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Hydrogen Solutions has no effect on the direction of Rosinbomb i.e., Rosinbomb and Next Hydrogen go up and down completely randomly.

Pair Corralation between Rosinbomb and Next Hydrogen

Given the investment horizon of 90 days Rosinbomb is expected to generate 51.78 times less return on investment than Next Hydrogen. But when comparing it to its historical volatility, Rosinbomb is 1.13 times less risky than Next Hydrogen. It trades about 0.0 of its potential returns per unit of risk. Next Hydrogen Solutions is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Next Hydrogen Solutions on September 12, 2024 and sell it today you would earn a total of  1.00  from holding Next Hydrogen Solutions or generate 3.45% return on investment over 90 days.

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

Rosinbomb  vs.  Next Hydrogen Solutions

Rosinbomb

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Rosinbomb has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Rosinbomb is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Next Hydrogen Solutions

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Next Hydrogen Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Next Hydrogen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Rosinbomb and Next Hydrogen

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

The idea behind Rosinbomb and Next Hydrogen 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.