Correlation Between Tesna and NEXTIN
Can any of the company-specific risk be diversified away by investing in both Tesna and NEXTIN 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 Tesna and NEXTIN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesna Inc and NEXTIN Inc, you can compare the effects of market volatilities on Tesna and NEXTIN 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 Tesna with a short position of NEXTIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesna and NEXTIN.
Diversification Opportunities for Tesna and NEXTIN
Very good diversification
The 3 months correlation between Tesna and NEXTIN is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Tesna Inc and NEXTIN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTIN Inc and Tesna 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 Tesna Inc are associated (or correlated) with NEXTIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTIN Inc has no effect on the direction of Tesna i.e., Tesna and NEXTIN go up and down completely randomly.
Pair Corralation between Tesna and NEXTIN
Assuming the 90 days trading horizon Tesna Inc is expected to under-perform the NEXTIN. In addition to that, Tesna is 1.04 times more volatile than NEXTIN Inc. It trades about -0.11 of its total potential returns per unit of risk. NEXTIN Inc is currently generating about -0.03 per unit of volatility. If you would invest 6,580,000 in NEXTIN Inc on August 29, 2024 and sell it today you would lose (1,020,000) from holding NEXTIN Inc or give up 15.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tesna Inc vs. NEXTIN Inc
Performance |
| Timeline |
| Tesna Inc |
| NEXTIN Inc |
Tesna and NEXTIN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesna and NEXTIN
The main advantage of trading using opposite Tesna and NEXTIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesna position performs unexpectedly, NEXTIN 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 NEXTIN will offset losses from the drop in NEXTIN's long position.The idea behind Tesna Inc and NEXTIN Inc 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.| NEXTIN vs. Parksystems Corp | NEXTIN vs. LEENO Industrial | NEXTIN vs. Tesna Inc | NEXTIN vs. Tokai Carbon Korea |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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