Correlation Between CODERE ONLINE and NexGen Energy

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

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

Diversification Opportunities for CODERE ONLINE and NexGen Energy

-0.43

Correlation Coefficient

CODERE ONLINE  NexGen Energy

Very good diversification

The 3 months correlation between CODERE and NexGen is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding CODERE ONLINE LUX and NexGen Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NexGen Energy and CODERE ONLINE 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 CODERE ONLINE LUX 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 CODERE ONLINE i.e., CODERE ONLINE and NexGen Energy go up and down completely randomly.

Pair Corralation between CODERE ONLINE and NexGen Energy

Assuming the 90 days horizon CODERE ONLINE LUX is expected to generate 0.82 times more return on investment than NexGen Energy. However, CODERE ONLINE LUX is 1.22 times less risky than NexGen Energy. It trades about -0.03 of its potential returns per unit of risk. NexGen Energy is currently generating about -0.18 per unit of risk. If you would invest  690.00  in CODERE ONLINE LUX on December 21, 2024 and sell it today you would lose (50.00) from holding CODERE ONLINE LUX or give up 7.25% of portfolio value over 90 days.

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

CODERE ONLINE LUX  vs.  NexGen Energy

CODERE ONLINE LUX

Risk-Adjusted Performance

Very Weak

Over the last 90 days CODERE ONLINE LUX has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CODERE ONLINE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

NexGen Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days NexGen Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CODERE ONLINE and NexGen Energy

The main advantage of trading using opposite CODERE ONLINE and NexGen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CODERE ONLINE 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 CODERE ONLINE LUX 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.