Correlation Between Sequana Medical and Nextensa
Can any of the company-specific risk be diversified away by investing in both Sequana Medical and Nextensa 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 Sequana Medical and Nextensa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sequana Medical NV and Nextensa NV, you can compare the effects of market volatilities on Sequana Medical and Nextensa 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 Sequana Medical with a short position of Nextensa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sequana Medical and Nextensa.
Diversification Opportunities for Sequana Medical and Nextensa
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sequana and Nextensa is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Sequana Medical NV and Nextensa NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextensa NV and Sequana Medical 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 Sequana Medical NV are associated (or correlated) with Nextensa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextensa NV has no effect on the direction of Sequana Medical i.e., Sequana Medical and Nextensa go up and down completely randomly.
Pair Corralation between Sequana Medical and Nextensa
Assuming the 90 days trading horizon Sequana Medical NV is expected to under-perform the Nextensa. In addition to that, Sequana Medical is 5.45 times more volatile than Nextensa NV. It trades about -0.09 of its total potential returns per unit of risk. Nextensa NV is currently generating about -0.39 per unit of volatility. If you would invest 4,290 in Nextensa NV on September 12, 2024 and sell it today you would lose (490.00) from holding Nextensa NV or give up 11.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sequana Medical NV vs. Nextensa NV
Performance |
| Timeline |
| Sequana Medical NV |
| Nextensa NV |
Sequana Medical and Nextensa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sequana Medical and Nextensa
The main advantage of trading using opposite Sequana Medical and Nextensa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sequana Medical position performs unexpectedly, Nextensa 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 Nextensa will offset losses from the drop in Nextensa's long position.The idea behind Sequana Medical NV and Nextensa NV 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.| Nextensa vs. Exmar NV | Nextensa vs. Iep Invest | Nextensa vs. Unifiedpost Group SA | Nextensa vs. Montea CVA |
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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