Correlation Between International Business and Nayax

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

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

Diversification Opportunities for International Business and Nayax

0.78

Correlation Coefficient

International Business  Nayax

Poor diversification

The 3 months correlation between International and Nayax is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding International Business Machine and Nayax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nayax and International Business 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 International Business Machines are associated (or correlated) with Nayax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nayax has no effect on the direction of International Business i.e., International Business and Nayax go up and down completely randomly.

Pair Corralation between International Business and Nayax

Considering the 90-day investment horizon International Business is expected to generate 1.5 times less return on investment than Nayax. But when comparing it to its historical volatility, International Business Machines is 1.11 times less risky than Nayax. It trades about 0.09 of its potential returns per unit of risk. Nayax is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,871  in Nayax on December 30, 2024 and sell it today you would earn a total of  519.00  from holding Nayax or generate 18.08% return on investment over 90 days.

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

International Business Machine  vs.  Nayax

International Business

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent fundamental drivers, International Business may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nayax

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nayax are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Nayax showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Business and Nayax

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

The idea behind International Business Machines and Nayax 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.