Correlation Between NEXE Innovations and Imaflex

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

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

Diversification Opportunities for NEXE Innovations and Imaflex

-0.29

Correlation Coefficient

NEXE Innovations  Imaflex

Very good diversification

The 3 months correlation between NEXE and Imaflex is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding NEXE Innovations and Imaflex in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Imaflex and NEXE Innovations 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 NEXE Innovations are associated (or correlated) with Imaflex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Imaflex has no effect on the direction of NEXE Innovations i.e., NEXE Innovations and Imaflex go up and down completely randomly.

Pair Corralation between NEXE Innovations and Imaflex

If you would invest  100.00  in Imaflex on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Imaflex or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

NEXE Innovations  vs.  Imaflex

NEXE Innovations

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NEXE Innovations are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NEXE Innovations reported solid returns over the last few months and may actually be approaching a breakup point.

Imaflex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Imaflex has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with NEXE Innovations and Imaflex

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

The idea behind NEXE Innovations and Imaflex 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.