Correlation Between Nable Communications and EyeGene

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Can any of the company-specific risk be diversified away by investing in both Nable Communications and EyeGene 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 Nable Communications and EyeGene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nable Communications and EyeGene, you can compare the effects of market volatilities on Nable Communications and EyeGene 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 Nable Communications with a short position of EyeGene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nable Communications and EyeGene.

Diversification Opportunities for Nable Communications and EyeGene

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nable and EyeGene is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nable Communications and EyeGene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EyeGene and Nable Communications 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 Nable Communications are associated (or correlated) with EyeGene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EyeGene has no effect on the direction of Nable Communications i.e., Nable Communications and EyeGene go up and down completely randomly.

Pair Corralation between Nable Communications and EyeGene

Assuming the 90 days trading horizon Nable Communications is expected to under-perform the EyeGene. But the stock apears to be less risky and, when comparing its historical volatility, Nable Communications is 3.07 times less risky than EyeGene. The stock trades about -0.04 of its potential returns per unit of risk. The EyeGene is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  296,000  in EyeGene on September 5, 2024 and sell it today you would lose (13,000) from holding EyeGene or give up 4.39% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Nable Communications  vs.  EyeGene

 Performance 
       Timeline  
Nable Communications 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Nable Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nable Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
EyeGene 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days EyeGene has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nable Communications and EyeGene Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nable Communications and EyeGene

The main advantage of trading using opposite Nable Communications and EyeGene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nable Communications position performs unexpectedly, EyeGene 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 EyeGene will offset losses from the drop in EyeGene's long position.
The idea behind Nable Communications and EyeGene 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.
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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