Correlation Between Next Generation and Café Serendipity

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

By analyzing existing cross correlation between Next Generation Management and Caf Serendipity Holdings, you can compare the effects of market volatilities on Next Generation and Café Serendipity 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 Next Generation with a short position of Café Serendipity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Generation and Café Serendipity.

Diversification Opportunities for Next Generation and Café Serendipity

0.15

Correlation Coefficient

Next Generation  Café Serendipity

Average diversification

The 3 months correlation between Next and Café is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Next Generation Management and Caf Serendipity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caf Serendipity Holdings and Next Generation 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 Next Generation Management are associated (or correlated) with Café Serendipity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caf Serendipity Holdings has no effect on the direction of Next Generation i.e., Next Generation and Café Serendipity go up and down completely randomly.

Pair Corralation between Next Generation and Café Serendipity

Given the investment horizon of 90 days Next Generation Management is expected to generate 2.25 times more return on investment than Café Serendipity. However, Next Generation is 2.25 times more volatile than Caf Serendipity Holdings. It trades about 0.08 of its potential returns per unit of risk. Caf Serendipity Holdings is currently generating about -0.13 per unit of risk. If you would invest  0.17  in Next Generation Management on December 25, 2024 and sell it today you would earn a total of  0.03  from holding Next Generation Management or generate 17.65% return on investment over 90 days.

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

Next Generation Management  vs.  Caf Serendipity Holdings

Next Generation Mana

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Next Generation Management are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Next Generation exhibited solid returns over the last few months and may actually be approaching a breakup point.

Caf Serendipity Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caf Serendipity Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Next Generation and Café Serendipity

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

The idea behind Next Generation Management and Caf Serendipity Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.