Correlation Between Nukkleus and Pennexx Foods

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

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

Diversification Opportunities for Nukkleus and Pennexx Foods

-0.45

Correlation Coefficient

Nukkleus  Pennexx Foods

Very good diversification

The 3 months correlation between Nukkleus and Pennexx is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nukkleus and Pennexx Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pennexx Foods and Nukkleus 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 Nukkleus are associated (or correlated) with Pennexx Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pennexx Foods has no effect on the direction of Nukkleus i.e., Nukkleus and Pennexx Foods go up and down completely randomly.

Pair Corralation between Nukkleus and Pennexx Foods

Given the investment horizon of 90 days Nukkleus is expected to generate 10.21 times more return on investment than Pennexx Foods. However, Nukkleus is 10.21 times more volatile than Pennexx Foods. It trades about 0.16 of its potential returns per unit of risk. Pennexx Foods is currently generating about -0.1 per unit of risk. If you would invest  267.00  in Nukkleus on October 26, 2024 and sell it today you would earn a total of  2,583  from holding Nukkleus or generate 967.42% return on investment over 90 days.

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

Nukkleus  vs.  Pennexx Foods

Nukkleus

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nukkleus are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady forward-looking signals, Nukkleus disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pennexx Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pennexx Foods has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nukkleus and Pennexx Foods

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

The idea behind Nukkleus and Pennexx Foods 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.