Correlation Between ADEIA P and NextPlat Corp

Can any of the company-specific risk be diversified away by investing in both ADEIA P and NextPlat Corp 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 ADEIA P and NextPlat Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between ADEIA P and NextPlat Corp, you can compare the effects of market volatilities on ADEIA P and NextPlat Corp 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 ADEIA P with a short position of NextPlat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ADEIA P and NextPlat Corp.

Diversification Opportunities for ADEIA P and NextPlat Corp

0.13

Correlation Coefficient

ADEIA P  NextPlat Corp

Average diversification

The 3 months correlation between ADEIA and NextPlat is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding ADEIA P and NextPlat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextPlat Corp and ADEIA P 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 ADEIA P are associated (or correlated) with NextPlat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextPlat Corp has no effect on the direction of ADEIA P i.e., ADEIA P and NextPlat Corp go up and down completely randomly.

Pair Corralation between ADEIA P and NextPlat Corp

Given the investment horizon of 90 days ADEIA P is expected to under-perform the NextPlat Corp. But the stock apears to be less risky and, when comparing its historical volatility, ADEIA P is 6.36 times less risky than NextPlat Corp. The stock trades about 0.0 of its potential returns per unit of risk. The NextPlat Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  9.90  in NextPlat Corp on December 29, 2024 and sell it today you would earn a total of  11.10  from holding NextPlat Corp or generate 112.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	90.16%
Values	Daily Returns

ADEIA P  vs.  NextPlat Corp

ADEIA P

Risk-Adjusted Performance

Very Weak

Over the last 90 days ADEIA P has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, ADEIA P is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

NextPlat Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NextPlat Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, NextPlat Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ADEIA P and NextPlat Corp

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

The idea behind ADEIA P and NextPlat Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.