Correlation Between Aqua Power and Nextmart
Can any of the company-specific risk be diversified away by investing in both Aqua Power and Nextmart 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 Aqua Power and Nextmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aqua Power Systems and Nextmart, you can compare the effects of market volatilities on Aqua Power and Nextmart 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 Aqua Power with a short position of Nextmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aqua Power and Nextmart.
Diversification Opportunities for Aqua Power and Nextmart
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aqua and Nextmart is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aqua Power Systems and Nextmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextmart and Aqua Power 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 Aqua Power Systems are associated (or correlated) with Nextmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextmart has no effect on the direction of Aqua Power i.e., Aqua Power and Nextmart go up and down completely randomly.
Pair Corralation between Aqua Power and Nextmart
Given the investment horizon of 90 days Aqua Power Systems is expected to generate 0.41 times more return on investment than Nextmart. However, Aqua Power Systems is 2.46 times less risky than Nextmart. It trades about 0.02 of its potential returns per unit of risk. Nextmart is currently generating about -0.11 per unit of risk. If you would invest 2.25 in Aqua Power Systems on September 15, 2024 and sell it today you would lose (0.05) from holding Aqua Power Systems or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Aqua Power Systems vs. Nextmart
Performance |
| Timeline |
| Aqua Power Systems |
| Nextmart |
Aqua Power and Nextmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aqua Power and Nextmart
The main advantage of trading using opposite Aqua Power and Nextmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aqua Power position performs unexpectedly, Nextmart 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 Nextmart will offset losses from the drop in Nextmart's long position.| Aqua Power vs. Nextmart | Aqua Power vs. Good Vibrations Shoes | Aqua Power vs. Genesis Electronics Group | Aqua Power vs. Harrison Vickers and |
| Nextmart vs. Genesis Electronics Group | Nextmart vs. Industrial Nanotech | Nextmart vs. Intl Star | Nextmart vs. HeadsUp Entertainment International |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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