Correlation Between Neonode and Meta Materials

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

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

Diversification Opportunities for Neonode and Meta Materials

0.59

Correlation Coefficient

Neonode  Meta Materials

Very weak diversification

The 3 months correlation between Neonode and Meta is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Neonode and Meta Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meta Materials and Neonode 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 Neonode are associated (or correlated) with Meta Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meta Materials has no effect on the direction of Neonode i.e., Neonode and Meta Materials go up and down completely randomly.

Pair Corralation between Neonode and Meta Materials

Given the investment horizon of 90 days Neonode is expected to generate 5.61 times less return on investment than Meta Materials. But when comparing it to its historical volatility, Neonode is 5.56 times less risky than Meta Materials. It trades about 0.02 of its potential returns per unit of risk. Meta Materials is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  37.00  in Meta Materials on September 13, 2024 and sell it today you would lose (36.99) from holding Meta Materials or give up 99.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.75%
Values	Daily Returns

Neonode  vs.  Meta Materials

Neonode

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neonode are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Neonode may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Meta Materials

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meta Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Meta Materials unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neonode and Meta Materials

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

The idea behind Neonode and Meta Materials 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.