Correlation Between NCL International and Nex Point

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

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

Diversification Opportunities for NCL International and Nex Point

-0.38

Correlation Coefficient

NCL International  Nex Point

Very good diversification

The 3 months correlation between NCL and Nex is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NCL International Logistics and Nex Point Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nex Point Public and NCL International 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 NCL International Logistics are associated (or correlated) with Nex Point. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nex Point Public has no effect on the direction of NCL International i.e., NCL International and Nex Point go up and down completely randomly.

Pair Corralation between NCL International and Nex Point

Assuming the 90 days trading horizon NCL International Logistics is expected to under-perform the Nex Point. But the stock apears to be less risky and, when comparing its historical volatility, NCL International Logistics is 1.08 times less risky than Nex Point. The stock trades about -0.17 of its potential returns per unit of risk. The Nex Point Public is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  65.00  in Nex Point Public on December 27, 2024 and sell it today you would earn a total of  3.00  from holding Nex Point Public or generate 4.62% return on investment over 90 days.

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

NCL International Logistics  vs.  Nex Point Public

NCL International

Risk-Adjusted Performance

Very Weak

Over the last 90 days NCL International Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Nex Point Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nex Point Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Nex Point disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NCL International and Nex Point

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

The idea behind NCL International Logistics and Nex Point Public 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.