Correlation Between Nex Point and NCL International

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

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

Diversification Opportunities for Nex Point and NCL International

-0.39

Correlation Coefficient

Nex Point  NCL International

Very good diversification

The 3 months correlation between Nex and NCL is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nex Point Public and NCL International Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCL International and Nex Point 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 Nex Point Public are associated (or correlated) with NCL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCL International has no effect on the direction of Nex Point i.e., Nex Point and NCL International go up and down completely randomly.

Pair Corralation between Nex Point and NCL International

Assuming the 90 days trading horizon Nex Point Public is expected to generate 1.14 times more return on investment than NCL International. However, Nex Point is 1.14 times more volatile than NCL International Logistics. It trades about 0.04 of its potential returns per unit of risk. NCL International Logistics is currently generating about -0.2 per unit of risk. If you would invest  68.00  in Nex Point Public on December 25, 2024 and sell it today you would earn a total of  4.00  from holding Nex Point Public or generate 5.88% return on investment over 90 days.

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

Nex Point Public  vs.  NCL International Logistics

Nex Point Public

Risk-Adjusted Performance

Modest

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.

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.

Pair Trading with Nex Point and NCL International

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

The idea behind Nex Point Public and NCL International Logistics 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.