Correlation Between Nextensa and EVS Broadcast

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

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

Diversification Opportunities for Nextensa and EVS Broadcast

-0.4

Correlation Coefficient

Nextensa  EVS Broadcast

Very good diversification

The 3 months correlation between Nextensa and EVS is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Nextensa NV and EVS Broadcast Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVS Broadcast Equipment and Nextensa 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 Nextensa NV are associated (or correlated) with EVS Broadcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVS Broadcast Equipment has no effect on the direction of Nextensa i.e., Nextensa and EVS Broadcast go up and down completely randomly.

Pair Corralation between Nextensa and EVS Broadcast

Assuming the 90 days trading horizon Nextensa NV is expected to under-perform the EVS Broadcast. But the stock apears to be less risky and, when comparing its historical volatility, Nextensa NV is 1.1 times less risky than EVS Broadcast. The stock trades about -0.19 of its potential returns per unit of risk. The EVS Broadcast Equipment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,868  in EVS Broadcast Equipment on September 13, 2024 and sell it today you would earn a total of  177.00  from holding EVS Broadcast Equipment or generate 6.17% return on investment over 90 days.

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

Nextensa NV  vs.  EVS Broadcast Equipment

Nextensa NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextensa NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

EVS Broadcast Equipment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in EVS Broadcast Equipment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, EVS Broadcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nextensa and EVS Broadcast

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

The idea behind Nextensa NV and EVS Broadcast Equipment 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.