Correlation Between Nexity and VANTIVA SA

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

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

Diversification Opportunities for Nexity and VANTIVA SA

0.71

Correlation Coefficient

Nexity  VANTIVA SA

Poor diversification

The 3 months correlation between Nexity and VANTIVA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Nexity and VANTIVA SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VANTIVA 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 VANTIVA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VANTIVA SA has no effect on the direction of Nexity i.e., Nexity and VANTIVA SA go up and down completely randomly.

Pair Corralation between Nexity and VANTIVA SA

Assuming the 90 days trading horizon Nexity is expected to generate 0.83 times more return on investment than VANTIVA SA. However, Nexity is 1.21 times less risky than VANTIVA SA. It trades about 0.08 of its potential returns per unit of risk. VANTIVA SA is currently generating about -0.11 per unit of risk. If you would invest  1,235  in Nexity on September 28, 2024 and sell it today you would earn a total of  43.00  from holding Nexity or generate 3.48% return on investment over 90 days.

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

Nexity  vs.  VANTIVA SA

Nexity

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexity are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Nexity may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VANTIVA SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VANTIVA SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, VANTIVA SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexity and VANTIVA SA

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

The idea behind Nexity and VANTIVA 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.