Correlation Between Rapac Communication and Nextcom

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

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

Diversification Opportunities for Rapac Communication and Nextcom

-0.08

Correlation Coefficient

Rapac Communication  Nextcom

Good diversification

The 3 months correlation between Rapac and Nextcom is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Rapac Communication Infrastruc and Nextcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextcom and Rapac Communication 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 Rapac Communication Infrastructure are associated (or correlated) with Nextcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextcom has no effect on the direction of Rapac Communication i.e., Rapac Communication and Nextcom go up and down completely randomly.

Pair Corralation between Rapac Communication and Nextcom

Assuming the 90 days trading horizon Rapac Communication Infrastructure is expected to generate 0.69 times more return on investment than Nextcom. However, Rapac Communication Infrastructure is 1.45 times less risky than Nextcom. It trades about 0.26 of its potential returns per unit of risk. Nextcom is currently generating about 0.12 per unit of risk. If you would invest  259,800  in Rapac Communication Infrastructure on September 15, 2024 and sell it today you would earn a total of  24,400  from holding Rapac Communication Infrastructure or generate 9.39% return on investment over 90 days.

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

Rapac Communication Infrastruc  vs.  Nextcom

Rapac Communication

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rapac Communication Infrastructure are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rapac Communication sustained solid returns over the last few months and may actually be approaching a breakup point.

Nextcom

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nextcom are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nextcom may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rapac Communication and Nextcom

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

The idea behind Rapac Communication Infrastructure and Nextcom 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.