Correlation Between News Network and NEX POINT
Can any of the company-specific risk be diversified away by investing in both News Network and NEX POINT 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 News Network and NEX POINT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between News Network and NEX POINT, you can compare the effects of market volatilities on News Network and NEX POINT 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 News Network with a short position of NEX POINT. Check out your portfolio center. Please also check ongoing floating volatility patterns of News Network and NEX POINT.
Diversification Opportunities for News Network and NEX POINT
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between News and NEX is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding News Network and NEX POINT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEX POINT and News Network 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 News Network are associated (or correlated) with NEX POINT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEX POINT has no effect on the direction of News Network i.e., News Network and NEX POINT go up and down completely randomly.
Pair Corralation between News Network and NEX POINT
Assuming the 90 days trading horizon News Network is expected to generate 3.62 times more return on investment than NEX POINT. However, News Network is 3.62 times more volatile than NEX POINT. It trades about 0.13 of its potential returns per unit of risk. NEX POINT is currently generating about 0.03 per unit of risk. If you would invest 3.00 in News Network on September 13, 2024 and sell it today you would lose (1.00) from holding News Network or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
News Network vs. NEX POINT
Performance |
| Timeline |
| News Network |
| NEX POINT |
News Network and NEX POINT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with News Network and NEX POINT
The main advantage of trading using opposite News Network and NEX POINT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if News Network position performs unexpectedly, NEX POINT 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 NEX POINT will offset losses from the drop in NEX POINT's long position.| News Network vs. Mega Lifesciences Public | News Network vs. Carabao Group Public | News Network vs. Humanica Public | News Network vs. Siam Wellness Group |
| NEX POINT vs. Permsin Steel Works | NEX POINT vs. SAF Special Steel | NEX POINT vs. MFC Asset Management | NEX POINT vs. G J Steel |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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