Correlation Between NEXT Plc and Superior Plus
Can any of the company-specific risk be diversified away by investing in both NEXT Plc and Superior Plus 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 NEXT Plc and Superior Plus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXT plc and Superior Plus Corp, you can compare the effects of market volatilities on NEXT Plc and Superior Plus 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 NEXT Plc with a short position of Superior Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXT Plc and Superior Plus.
Diversification Opportunities for NEXT Plc and Superior Plus
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NEXT and Superior is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NEXT plc and Superior Plus Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior Plus Corp and NEXT Plc 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 NEXT plc are associated (or correlated) with Superior Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Plus Corp has no effect on the direction of NEXT Plc i.e., NEXT Plc and Superior Plus go up and down completely randomly.
Pair Corralation between NEXT Plc and Superior Plus
Assuming the 90 days horizon NEXT plc is expected to under-perform the Superior Plus. But the stock apears to be less risky and, when comparing its historical volatility, NEXT plc is 3.03 times less risky than Superior Plus. The stock trades about -0.06 of its potential returns per unit of risk. The Superior Plus Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 426.00 in Superior Plus Corp on September 1, 2024 and sell it today you would earn a total of 2.00 from holding Superior Plus Corp or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NEXT plc vs. Superior Plus Corp
Performance |
| Timeline |
| NEXT plc |
| Superior Plus Corp |
NEXT Plc and Superior Plus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXT Plc and Superior Plus
The main advantage of trading using opposite NEXT Plc and Superior Plus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXT Plc position performs unexpectedly, Superior Plus 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 Superior Plus will offset losses from the drop in Superior Plus' long position.| NEXT Plc vs. SCOTT TECHNOLOGY | NEXT Plc vs. Astral Foods Limited | NEXT Plc vs. CAL MAINE FOODS | NEXT Plc vs. Nok Airlines PCL |
| Superior Plus vs. TSOGO SUN GAMING | Superior Plus vs. FUTURE GAMING GRP | Superior Plus vs. TROPHY GAMES DEV | Superior Plus vs. Boyd Gaming |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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