Correlation Between Nexoptic Technology and Eddy Smart

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

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

Diversification Opportunities for Nexoptic Technology and Eddy Smart

0.37

Correlation Coefficient

Nexoptic Technology  Eddy Smart

Weak diversification

The 3 months correlation between Nexoptic and Eddy is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nexoptic Technology Corp and Eddy Smart Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eddy Smart Home and Nexoptic Technology 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 Nexoptic Technology Corp are associated (or correlated) with Eddy Smart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eddy Smart Home has no effect on the direction of Nexoptic Technology i.e., Nexoptic Technology and Eddy Smart go up and down completely randomly.

Pair Corralation between Nexoptic Technology and Eddy Smart

Assuming the 90 days horizon Nexoptic Technology Corp is expected to generate 2.89 times more return on investment than Eddy Smart. However, Nexoptic Technology is 2.89 times more volatile than Eddy Smart Home. It trades about 0.07 of its potential returns per unit of risk. Eddy Smart Home is currently generating about 0.05 per unit of risk. If you would invest  2.00  in Nexoptic Technology Corp on December 29, 2024 and sell it today you would lose (0.50) from holding Nexoptic Technology Corp or give up 25.0% of portfolio value over 90 days.

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

Nexoptic Technology Corp  vs.  Eddy Smart Home

Nexoptic Technology Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nexoptic Technology Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Nexoptic Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Eddy Smart Home

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eddy Smart Home are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Eddy Smart showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexoptic Technology and Eddy Smart

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

The idea behind Nexoptic Technology Corp and Eddy Smart Home 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.