Correlation Between Intl Star and Nextmart
Can any of the company-specific risk be diversified away by investing in both Intl Star 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 Intl Star and Nextmart into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intl Star and Nextmart, you can compare the effects of market volatilities on Intl Star 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 Intl Star with a short position of Nextmart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intl Star and Nextmart.
Diversification Opportunities for Intl Star and Nextmart
Very weak diversification
The 3 months correlation between Intl and Nextmart is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Intl Star and Nextmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextmart and Intl Star 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 Intl Star 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 Intl Star i.e., Intl Star and Nextmart go up and down completely randomly.
Pair Corralation between Intl Star and Nextmart
Given the investment horizon of 90 days Intl Star is expected to under-perform the Nextmart. But the pink sheet apears to be less risky and, when comparing its historical volatility, Intl Star is 5.02 times less risky than Nextmart. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Nextmart is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.04 in Nextmart on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Nextmart or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intl Star vs. Nextmart
Performance |
| Timeline |
| Intl Star |
| Nextmart |
Intl Star and Nextmart Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intl Star and Nextmart
The main advantage of trading using opposite Intl Star and Nextmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intl Star 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.| Intl Star vs. TransAKT | Intl Star vs. China Health Management | Intl Star vs. Huaizhong Health Group | Intl Star vs. Trimax Corp |
| 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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