Correlation Between Kainos Group and NextPlat Corp

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

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

Diversification Opportunities for Kainos Group and NextPlat Corp

0.57

Correlation Coefficient

Kainos Group  NextPlat Corp

Very weak diversification

The 3 months correlation between Kainos and NextPlat is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Kainos Group plc and NextPlat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextPlat Corp and Kainos Group 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 Kainos Group plc 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 Kainos Group i.e., Kainos Group and NextPlat Corp go up and down completely randomly.

Pair Corralation between Kainos Group and NextPlat Corp

Assuming the 90 days horizon Kainos Group is expected to generate 4.08 times less return on investment than NextPlat Corp. But when comparing it to its historical volatility, Kainos Group plc is 6.19 times less risky than NextPlat Corp. It trades about 0.04 of its potential returns per unit of risk. NextPlat Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  22.00  in NextPlat Corp on September 25, 2024 and sell it today you would lose (10.00) from holding NextPlat Corp or give up 45.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.73%
Values	Daily Returns

Kainos Group plc  vs.  NextPlat Corp

Kainos Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 conflicting 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 Kainos Group and NextPlat Corp

The main advantage of trading using opposite Kainos Group and NextPlat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kainos Group 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 Kainos Group plc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.