Correlation Between PLAYWAY SA and NexGen Energy

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

By analyzing existing cross correlation between PLAYWAY SA ZY 10 and NexGen Energy, you can compare the effects of market volatilities on PLAYWAY SA and NexGen Energy 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 PLAYWAY SA with a short position of NexGen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PLAYWAY SA and NexGen Energy.

Diversification Opportunities for PLAYWAY SA and NexGen Energy

-0.41

Correlation Coefficient

PLAYWAY SA  NexGen Energy

Very good diversification

The 3 months correlation between PLAYWAY and NexGen is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PLAYWAY SA ZY 10 and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy and PLAYWAY SA 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 PLAYWAY SA ZY 10 are associated (or correlated) with NexGen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NexGen Energy has no effect on the direction of PLAYWAY SA i.e., PLAYWAY SA and NexGen Energy go up and down completely randomly.

Pair Corralation between PLAYWAY SA and NexGen Energy

Assuming the 90 days horizon PLAYWAY SA is expected to generate 1.26 times less return on investment than NexGen Energy. But when comparing it to its historical volatility, PLAYWAY SA ZY 10 is 1.18 times less risky than NexGen Energy. It trades about 0.04 of its potential returns per unit of risk. NexGen Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  433.00  in NexGen Energy on October 23, 2024 and sell it today you would earn a total of  223.00  from holding NexGen Energy or generate 51.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PLAYWAY SA ZY 10  vs.  NexGen Energy

PLAYWAY SA ZY

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAYWAY SA ZY 10 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PLAYWAY SA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

NexGen Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NexGen Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PLAYWAY SA and NexGen Energy

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

The idea behind PLAYWAY SA ZY 10 and NexGen Energy 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.