Correlation Between Nextmart and Yoma Strategic

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

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

Diversification Opportunities for Nextmart and Yoma Strategic

0.24

Correlation Coefficient

Nextmart  Yoma Strategic

Modest diversification

The 3 months correlation between Nextmart and Yoma is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nextmart and Yoma Strategic Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yoma Strategic Holdings and Nextmart 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 Nextmart are associated (or correlated) with Yoma Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yoma Strategic Holdings has no effect on the direction of Nextmart i.e., Nextmart and Yoma Strategic go up and down completely randomly.

Pair Corralation between Nextmart and Yoma Strategic

Given the investment horizon of 90 days Nextmart is expected to generate 7.22 times more return on investment than Yoma Strategic. However, Nextmart is 7.22 times more volatile than Yoma Strategic Holdings. It trades about 0.18 of its potential returns per unit of risk. Yoma Strategic Holdings is currently generating about 0.01 per unit of risk. If you would invest  0.01  in Nextmart on September 30, 2024 and sell it today you would earn a total of  0.05  from holding Nextmart or generate 500.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Nextmart  vs.  Yoma Strategic Holdings

Nextmart

Risk-Adjusted Performance

12 of 100

Good

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

Yoma Strategic Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yoma Strategic Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nextmart and Yoma Strategic

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

The idea behind Nextmart and Yoma Strategic Holdings 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.