Correlation Between Parx Plastics and Nextedia

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

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

Diversification Opportunities for Parx Plastics and Nextedia

-0.44

Correlation Coefficient

Parx Plastics  Nextedia

Very good diversification

The 3 months correlation between Parx and Nextedia is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Parx Plastics NV and Nextedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextedia and Parx Plastics 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 Parx Plastics NV are associated (or correlated) with Nextedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextedia has no effect on the direction of Parx Plastics i.e., Parx Plastics and Nextedia go up and down completely randomly.

Pair Corralation between Parx Plastics and Nextedia

Assuming the 90 days trading horizon Parx Plastics NV is expected to generate 0.94 times more return on investment than Nextedia. However, Parx Plastics NV is 1.07 times less risky than Nextedia. It trades about 0.18 of its potential returns per unit of risk. Nextedia is currently generating about 0.0 per unit of risk. If you would invest  21.00  in Parx Plastics NV on October 12, 2024 and sell it today you would earn a total of  8.00  from holding Parx Plastics NV or generate 38.1% return on investment over 90 days.

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

Parx Plastics NV  vs.  Nextedia

Parx Plastics NV

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Parx Plastics NV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Parx Plastics reported solid returns over the last few months and may actually be approaching a breakup point.

Nextedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextedia has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Nextedia is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Parx Plastics and Nextedia

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

The idea behind Parx Plastics NV and Nextedia 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.