Correlation Between LQwD FinTech and NextPlat Corp

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

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

Diversification Opportunities for LQwD FinTech and NextPlat Corp

-0.2

Correlation Coefficient

LQwD FinTech  NextPlat Corp

Good diversification

The 3 months correlation between LQwD and NextPlat is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding LQwD FinTech Corp and NextPlat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextPlat Corp and LQwD FinTech 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 LQwD FinTech Corp 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 LQwD FinTech i.e., LQwD FinTech and NextPlat Corp go up and down completely randomly.

Pair Corralation between LQwD FinTech and NextPlat Corp

Assuming the 90 days horizon LQwD FinTech Corp is expected to under-perform the NextPlat Corp. But the otc stock apears to be less risky and, when comparing its historical volatility, LQwD FinTech Corp is 2.86 times less risky than NextPlat Corp. The otc stock trades about -0.09 of its potential returns per unit of risk. The NextPlat Corp is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  9.90  in NextPlat Corp on December 29, 2024 and sell it today you would earn a total of  11.10  from holding NextPlat Corp or generate 112.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.3%
Values	Daily Returns

LQwD FinTech Corp  vs.  NextPlat Corp

LQwD FinTech Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days LQwD FinTech Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental 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.

NextPlat Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NextPlat Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, NextPlat Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LQwD FinTech and NextPlat Corp

The main advantage of trading using opposite LQwD FinTech and NextPlat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LQwD FinTech 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 LQwD FinTech Corp 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.