Correlation Between Next Bt and Solution Advanced
Can any of the company-specific risk be diversified away by investing in both Next Bt and Solution Advanced 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 Next Bt and Solution Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Bt Co and Solution Advanced Technology, you can compare the effects of market volatilities on Next Bt and Solution Advanced 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 Next Bt with a short position of Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Bt and Solution Advanced.
Diversification Opportunities for Next Bt and Solution Advanced
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Next and Solution is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Next Bt Co and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced and Next Bt 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 Next Bt Co are associated (or correlated) with Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of Next Bt i.e., Next Bt and Solution Advanced go up and down completely randomly.
Pair Corralation between Next Bt and Solution Advanced
Assuming the 90 days trading horizon Next Bt Co is expected to generate 1.58 times more return on investment than Solution Advanced. However, Next Bt is 1.58 times more volatile than Solution Advanced Technology. It trades about 0.07 of its potential returns per unit of risk. Solution Advanced Technology is currently generating about 0.06 per unit of risk. If you would invest 22,000 in Next Bt Co on September 13, 2024 and sell it today you would earn a total of 1,400 from holding Next Bt Co or generate 6.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Bt Co vs. Solution Advanced Technology
Performance |
| Timeline |
| Next Bt |
| Solution Advanced |
Next Bt and Solution Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Bt and Solution Advanced
The main advantage of trading using opposite Next Bt and Solution Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Bt position performs unexpectedly, Solution Advanced 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 Solution Advanced will offset losses from the drop in Solution Advanced's long position.| Next Bt vs. Korea New Network | Next Bt vs. ICD Co | Next Bt vs. DYPNF CoLtd | Next Bt vs. Solution Advanced Technology |
| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
Check out your portfolio center.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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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