Correlation Between NexGen Energy and JSC National

Can any of the company-specific risk be diversified away by investing in both NexGen Energy and JSC National 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 NexGen Energy and JSC National into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NexGen Energy and JSC National Atomic, you can compare the effects of market volatilities on NexGen Energy and JSC National 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 NexGen Energy with a short position of JSC National. Check out your portfolio center. Please also check ongoing floating volatility patterns of NexGen Energy and JSC National.

Diversification Opportunities for NexGen Energy and JSC National

0.89

Correlation Coefficient

NexGen Energy  JSC National

Very poor diversification

The 3 months correlation between NexGen and JSC is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding NexGen Energy and JSC National Atomic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JSC National Atomic and NexGen Energy 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 NexGen Energy are associated (or correlated) with JSC National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JSC National Atomic has no effect on the direction of NexGen Energy i.e., NexGen Energy and JSC National go up and down completely randomly.

Pair Corralation between NexGen Energy and JSC National

Assuming the 90 days horizon NexGen Energy is expected to generate 1.41 times more return on investment than JSC National. However, NexGen Energy is 1.41 times more volatile than JSC National Atomic. It trades about 0.05 of its potential returns per unit of risk. JSC National Atomic is currently generating about 0.05 per unit of risk. If you would invest  386.00  in NexGen Energy on September 20, 2024 and sell it today you would earn a total of  300.00  from holding NexGen Energy or generate 77.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

NexGen Energy  vs.  JSC National Atomic

NexGen Energy

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NexGen Energy are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NexGen Energy reported solid returns over the last few months and may actually be approaching a breakup point.

JSC National Atomic

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JSC National Atomic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, JSC National may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NexGen Energy and JSC National

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

The idea behind NexGen Energy and JSC National Atomic 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.