Correlation Between Nexity and Bilendi

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

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

Diversification Opportunities for Nexity and Bilendi

0.47

Correlation Coefficient

Nexity  Bilendi

Very weak diversification

The 3 months correlation between Nexity and Bilendi is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nexity and Bilendi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilendi and Nexity 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 Nexity are associated (or correlated) with Bilendi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilendi has no effect on the direction of Nexity i.e., Nexity and Bilendi go up and down completely randomly.

Pair Corralation between Nexity and Bilendi

Assuming the 90 days trading horizon Nexity is expected to under-perform the Bilendi. In addition to that, Nexity is 1.28 times more volatile than Bilendi. It trades about -0.01 of its total potential returns per unit of risk. Bilendi is currently generating about 0.31 per unit of volatility. If you would invest  1,285  in Bilendi on December 2, 2024 and sell it today you would earn a total of  815.00  from holding Bilendi or generate 63.42% return on investment over 90 days.

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

Nexity  vs.  Bilendi

Nexity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexity has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Nexity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Bilendi

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bilendi are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Bilendi reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexity and Bilendi

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

The idea behind Nexity and Bilendi 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.