Correlation Between Appswarm and NextPlat Corp

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

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

Diversification Opportunities for Appswarm and NextPlat Corp

0.52

Correlation Coefficient

Appswarm  NextPlat Corp

Very weak diversification

The 3 months correlation between Appswarm and NextPlat is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Appswarm and NextPlat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextPlat Corp and Appswarm 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 Appswarm are associated (or correlated) with NextPlat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextPlat Corp has no effect on the direction of Appswarm i.e., Appswarm and NextPlat Corp go up and down completely randomly.

Pair Corralation between Appswarm and NextPlat Corp

Given the investment horizon of 90 days Appswarm is expected to generate 1.45 times more return on investment than NextPlat Corp. However, Appswarm is 1.45 times more volatile than NextPlat Corp. It trades about 0.09 of its potential returns per unit of risk. NextPlat Corp is currently generating about 0.02 per unit of risk. If you would invest  0.03  in Appswarm on September 29, 2024 and sell it today you would lose (0.01) from holding Appswarm or give up 33.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	79.37%
Values	Daily Returns

Appswarm  vs.  NextPlat Corp

Appswarm

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Appswarm are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Appswarm displayed solid returns over the last few months and may actually be approaching a breakup point.

NextPlat Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NextPlat Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, NextPlat Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Appswarm and NextPlat Corp

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

The idea behind Appswarm and NextPlat Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.