Correlation Between BASE and NextPlat Corp

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

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

Diversification Opportunities for BASE and NextPlat Corp

0.12

Correlation Coefficient

BASE  NextPlat Corp

Average diversification

The 3 months correlation between BASE and NextPlat is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and NextPlat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextPlat Corp and BASE 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 BASE Inc 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 BASE i.e., BASE and NextPlat Corp go up and down completely randomly.

Pair Corralation between BASE and NextPlat Corp

Assuming the 90 days horizon BASE Inc is expected to generate 0.19 times more return on investment than NextPlat Corp. However, BASE Inc is 5.24 times less risky than NextPlat Corp. It trades about 0.22 of its potential returns per unit of risk. NextPlat Corp is currently generating about 0.01 per unit of risk. If you would invest  150.00  in BASE Inc on September 23, 2024 and sell it today you would earn a total of  43.00  from holding BASE Inc or generate 28.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

BASE Inc  vs.  NextPlat Corp

BASE Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

NextPlat Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextPlat Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with BASE and NextPlat Corp

The main advantage of trading using opposite BASE and NextPlat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASE 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 BASE Inc 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.