Correlation Between IRIDEX and Nexalin Technology

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

Diversification Opportunities for IRIDEX and Nexalin Technology

-0.46
  Correlation Coefficient

Very good diversification

The 3 months correlation between IRIDEX and Nexalin is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding IRIDEX and Nexalin Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexalin Technology and IRIDEX 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 IRIDEX are associated (or correlated) with Nexalin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexalin Technology has no effect on the direction of IRIDEX i.e., IRIDEX and Nexalin Technology go up and down completely randomly.

Pair Corralation between IRIDEX and Nexalin Technology

Given the investment horizon of 90 days IRIDEX is expected to generate 17.21 times less return on investment than Nexalin Technology. But when comparing it to its historical volatility, IRIDEX is 2.75 times less risky than Nexalin Technology. It trades about 0.01 of its potential returns per unit of risk. Nexalin Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  237.00  in Nexalin Technology on August 24, 2024 and sell it today you would earn a total of  145.00  from holding Nexalin Technology or generate 61.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

IRIDEX  vs.  Nexalin Technology

 Performance 
       Timeline  
IRIDEX 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days IRIDEX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, IRIDEX is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Nexalin Technology 

Risk-Adjusted Performance

18 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Nexalin Technology are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite abnormal basic indicators, Nexalin Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

IRIDEX and Nexalin Technology Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with IRIDEX and Nexalin Technology

The main advantage of trading using opposite IRIDEX and Nexalin Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IRIDEX position performs unexpectedly, Nexalin Technology 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 Nexalin Technology will offset losses from the drop in Nexalin Technology's long position.
The idea behind IRIDEX and Nexalin Technology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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