Correlation Between Next Hydrogen and Rosinbomb

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

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

Diversification Opportunities for Next Hydrogen and Rosinbomb

0.76

Correlation Coefficient

Next Hydrogen  Rosinbomb

Poor diversification

The 3 months correlation between Next and Rosinbomb is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Next Hydrogen Solutions and Rosinbomb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rosinbomb and Next Hydrogen 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 Hydrogen Solutions are associated (or correlated) with Rosinbomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rosinbomb has no effect on the direction of Next Hydrogen i.e., Next Hydrogen and Rosinbomb go up and down completely randomly.

Pair Corralation between Next Hydrogen and Rosinbomb

Assuming the 90 days horizon Next Hydrogen is expected to generate 1.69 times less return on investment than Rosinbomb. But when comparing it to its historical volatility, Next Hydrogen Solutions is 1.02 times less risky than Rosinbomb. It trades about 0.15 of its potential returns per unit of risk. Rosinbomb is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  0.26  in Rosinbomb on December 2, 2024 and sell it today you would earn a total of  0.76  from holding Rosinbomb or generate 292.31% return on investment over 90 days.

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

Next Hydrogen Solutions  vs.  Rosinbomb

Next Hydrogen Solutions

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Next Hydrogen Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Next Hydrogen reported solid returns over the last few months and may actually be approaching a breakup point.

Rosinbomb

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rosinbomb are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Rosinbomb displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Next Hydrogen and Rosinbomb

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

The idea behind Next Hydrogen Solutions and Rosinbomb 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.