Correlation Between NextSource Materials and Cybin

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

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

Diversification Opportunities for NextSource Materials and Cybin

0.8

Correlation Coefficient

NextSource Materials  Cybin

Very poor diversification

The 3 months correlation between NextSource and Cybin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Cybin Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cybin Inc and NextSource Materials 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 NextSource Materials are associated (or correlated) with Cybin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cybin Inc has no effect on the direction of NextSource Materials i.e., NextSource Materials and Cybin go up and down completely randomly.

Pair Corralation between NextSource Materials and Cybin

Assuming the 90 days trading horizon NextSource Materials is expected to under-perform the Cybin. In addition to that, NextSource Materials is 1.7 times more volatile than Cybin Inc. It trades about -0.18 of its total potential returns per unit of risk. Cybin Inc is currently generating about -0.12 per unit of volatility. If you would invest  1,355  in Cybin Inc on December 24, 2024 and sell it today you would lose (310.00) from holding Cybin Inc or give up 22.88% of portfolio value over 90 days.

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

NextSource Materials  vs.  Cybin Inc

NextSource Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days NextSource Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cybin Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cybin Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NextSource Materials and Cybin

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

The idea behind NextSource Materials and Cybin Inc 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 Transaction History module to view history of all your transactions and understand their impact on performance.