Correlation Between Nexity and Herige SA

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

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

Diversification Opportunities for Nexity and Herige SA

0.29

Correlation Coefficient

Nexity  Herige SA

Modest diversification

The 3 months correlation between Nexity and Herige is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nexity and Herige SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herige SA 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 Herige SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herige SA has no effect on the direction of Nexity i.e., Nexity and Herige SA go up and down completely randomly.

Pair Corralation between Nexity and Herige SA

Assuming the 90 days trading horizon Nexity is expected to under-perform the Herige SA. In addition to that, Nexity is 1.32 times more volatile than Herige SA. It trades about -0.09 of its total potential returns per unit of risk. Herige SA is currently generating about 0.0 per unit of volatility. If you would invest  2,310  in Herige SA on December 30, 2024 and sell it today you would lose (40.00) from holding Herige SA or give up 1.73% of portfolio value over 90 days.

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

Nexity  vs.  Herige SA

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 weak performance in the last few months, the Stock's forward indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Herige SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Herige SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Herige SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Nexity and Herige SA

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

The idea behind Nexity and Herige SA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.