Correlation Between Eldav L and Nextcom

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

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

Diversification Opportunities for Eldav L and Nextcom

-0.27

Correlation Coefficient

Eldav L  Nextcom

Very good diversification

The 3 months correlation between Eldav and Nextcom is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Eldav L and Nextcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextcom and Eldav L 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 Eldav L are associated (or correlated) with Nextcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextcom has no effect on the direction of Eldav L i.e., Eldav L and Nextcom go up and down completely randomly.

Pair Corralation between Eldav L and Nextcom

Assuming the 90 days trading horizon Eldav L is expected to under-perform the Nextcom. In addition to that, Eldav L is 1.23 times more volatile than Nextcom. It trades about -0.01 of its total potential returns per unit of risk. Nextcom is currently generating about 0.05 per unit of volatility. If you would invest  63,410  in Nextcom on September 15, 2024 and sell it today you would earn a total of  3,080  from holding Nextcom or generate 4.86% return on investment over 90 days.

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

Eldav L  vs.  Nextcom

Eldav L

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eldav L has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Eldav L is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Nextcom

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Eldav L and Nextcom

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

The idea behind Eldav L and Nextcom 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.