Correlation Between NextSource Materials and Maple Peak

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

By analyzing existing cross correlation between NextSource Materials and Maple Peak Investments, you can compare the effects of market volatilities on NextSource Materials and Maple Peak 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 Maple Peak. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextSource Materials and Maple Peak.

Diversification Opportunities for NextSource Materials and Maple Peak

0.0

Correlation Coefficient

NextSource Materials  Maple Peak

Pay attention - limited upside

The 3 months correlation between NextSource and Maple is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NextSource Materials and Maple Peak Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maple Peak Investments 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 Maple Peak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maple Peak Investments has no effect on the direction of NextSource Materials i.e., NextSource Materials and Maple Peak go up and down completely randomly.

Pair Corralation between NextSource Materials and Maple Peak

If you would invest  51.00  in NextSource Materials on September 25, 2024 and sell it today you would earn a total of  29.00  from holding NextSource Materials or generate 56.86% return on investment over 90 days.

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

NextSource Materials  vs.  Maple Peak Investments

NextSource Materials

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NextSource Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, NextSource Materials displayed solid returns over the last few months and may actually be approaching a breakup point.

Maple Peak Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maple Peak Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Maple Peak is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with NextSource Materials and Maple Peak

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

The idea behind NextSource Materials and Maple Peak Investments 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..