Correlation Between NAU IB and Next Bt

Can any of the company-specific risk be diversified away by investing in both NAU IB and Next Bt 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 NAU IB and Next Bt into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NAU IB Capital and Next Bt Co, you can compare the effects of market volatilities on NAU IB and Next Bt 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 NAU IB with a short position of Next Bt. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAU IB and Next Bt.

Diversification Opportunities for NAU IB and Next Bt

-0.36

Correlation Coefficient

NAU IB  Next Bt

Very good diversification

The 3 months correlation between NAU and Next is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NAU IB Capital and Next Bt Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Bt and NAU IB 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 NAU IB Capital are associated (or correlated) with Next Bt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Bt has no effect on the direction of NAU IB i.e., NAU IB and Next Bt go up and down completely randomly.

Pair Corralation between NAU IB and Next Bt

Assuming the 90 days trading horizon NAU IB Capital is expected to under-perform the Next Bt. But the stock apears to be less risky and, when comparing its historical volatility, NAU IB Capital is 2.2 times less risky than Next Bt. The stock trades about -0.03 of its potential returns per unit of risk. The Next Bt Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  78,667  in Next Bt Co on December 23, 2024 and sell it today you would earn a total of  63,833  from holding Next Bt Co or generate 81.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.48%
Values	Daily Returns

NAU IB Capital  vs.  Next Bt Co

NAU IB Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAU IB Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Next Bt

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Next Bt Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Next Bt sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NAU IB and Next Bt

The main advantage of trading using opposite NAU IB and Next Bt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAU IB position performs unexpectedly, Next Bt 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 Next Bt will offset losses from the drop in Next Bt's long position.

The idea behind NAU IB Capital and Next Bt Co 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.