Correlation Between Nexgel and Innerscope Advertising

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

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

Diversification Opportunities for Nexgel and Innerscope Advertising

0.28

Correlation Coefficient

Nexgel  Innerscope Advertising

Modest diversification

The 3 months correlation between Nexgel and Innerscope is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nexgel Inc and Innerscope Advertising Agency in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innerscope Advertising and Nexgel 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 Nexgel Inc are associated (or correlated) with Innerscope Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innerscope Advertising has no effect on the direction of Nexgel i.e., Nexgel and Innerscope Advertising go up and down completely randomly.

Pair Corralation between Nexgel and Innerscope Advertising

Given the investment horizon of 90 days Nexgel Inc is expected to under-perform the Innerscope Advertising. But the stock apears to be less risky and, when comparing its historical volatility, Nexgel Inc is 2.99 times less risky than Innerscope Advertising. The stock trades about -0.27 of its potential returns per unit of risk. The Innerscope Advertising Agency is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2.50  in Innerscope Advertising Agency on December 2, 2024 and sell it today you would lose (0.45) from holding Innerscope Advertising Agency or give up 18.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Nexgel Inc  vs.  Innerscope Advertising Agency

Nexgel Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexgel Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Nexgel is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Innerscope Advertising

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Innerscope Advertising Agency are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Innerscope Advertising exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexgel and Innerscope Advertising

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

The idea behind Nexgel Inc and Innerscope Advertising Agency 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.