Correlation Between SERI INDUSTRIAL and NEXTDC
Can any of the company-specific risk be diversified away by investing in both SERI INDUSTRIAL and NEXTDC 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 SERI INDUSTRIAL and NEXTDC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SERI INDUSTRIAL EO and NEXTDC LTD, you can compare the effects of market volatilities on SERI INDUSTRIAL and NEXTDC 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 SERI INDUSTRIAL with a short position of NEXTDC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SERI INDUSTRIAL and NEXTDC.
Diversification Opportunities for SERI INDUSTRIAL and NEXTDC
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SERI and NEXTDC is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SERI INDUSTRIAL EO and NEXTDC LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXTDC LTD and SERI INDUSTRIAL 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 SERI INDUSTRIAL EO are associated (or correlated) with NEXTDC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXTDC LTD has no effect on the direction of SERI INDUSTRIAL i.e., SERI INDUSTRIAL and NEXTDC go up and down completely randomly.
Pair Corralation between SERI INDUSTRIAL and NEXTDC
Assuming the 90 days trading horizon SERI INDUSTRIAL EO is expected to under-perform the NEXTDC. In addition to that, SERI INDUSTRIAL is 1.39 times more volatile than NEXTDC LTD. It trades about -0.24 of its total potential returns per unit of risk. NEXTDC LTD is currently generating about -0.06 per unit of volatility. If you would invest 930.00 in NEXTDC LTD on October 11, 2024 and sell it today you would lose (20.00) from holding NEXTDC LTD or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SERI INDUSTRIAL EO vs. NEXTDC LTD
Performance |
| Timeline |
| SERI INDUSTRIAL EO |
| NEXTDC LTD |
SERI INDUSTRIAL and NEXTDC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SERI INDUSTRIAL and NEXTDC
The main advantage of trading using opposite SERI INDUSTRIAL and NEXTDC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SERI INDUSTRIAL position performs unexpectedly, NEXTDC 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 NEXTDC will offset losses from the drop in NEXTDC's long position.| SERI INDUSTRIAL vs. TOREX SEMICONDUCTOR LTD | SERI INDUSTRIAL vs. Fast Retailing Co | SERI INDUSTRIAL vs. Tradeweb Markets | SERI INDUSTRIAL vs. FAST RETAIL ADR |
| NEXTDC vs. CODERE ONLINE LUX | NEXTDC vs. OPKO HEALTH | NEXTDC vs. CITY OFFICE REIT | NEXTDC vs. US Physical Therapy |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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