Correlation Between Nextferm Technologies and B Communications
Can any of the company-specific risk be diversified away by investing in both Nextferm Technologies and B Communications 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 Nextferm Technologies and B Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nextferm Technologies and B Communications, you can compare the effects of market volatilities on Nextferm Technologies and B Communications 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 Nextferm Technologies with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nextferm Technologies and B Communications.
Diversification Opportunities for Nextferm Technologies and B Communications
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nextferm and BCOM is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nextferm Technologies and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Nextferm Technologies 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 Nextferm Technologies are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Nextferm Technologies i.e., Nextferm Technologies and B Communications go up and down completely randomly.
Pair Corralation between Nextferm Technologies and B Communications
Assuming the 90 days trading horizon Nextferm Technologies is expected to under-perform the B Communications. In addition to that, Nextferm Technologies is 3.69 times more volatile than B Communications. It trades about -0.09 of its total potential returns per unit of risk. B Communications is currently generating about 0.16 per unit of volatility. If you would invest 188,000 in B Communications on November 27, 2024 and sell it today you would earn a total of 8,200 from holding B Communications or generate 4.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nextferm Technologies vs. B Communications
Performance |
| Timeline |
| Nextferm Technologies |
| B Communications |
Nextferm Technologies and B Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nextferm Technologies and B Communications
The main advantage of trading using opposite Nextferm Technologies and B Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nextferm Technologies position performs unexpectedly, B Communications 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 B Communications will offset losses from the drop in B Communications' long position.| Nextferm Technologies vs. Batm Advanced Communications | Nextferm Technologies vs. Libra Insurance | Nextferm Technologies vs. B Communications | Nextferm Technologies vs. Ram On Investments and |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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