Correlation Between Nexoptic Technology and Falcon Energy

Can any of the company-specific risk be diversified away by investing in both Nexoptic Technology and Falcon Energy 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 Falcon Energy 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 Falcon Energy Materials, you can compare the effects of market volatilities on Nexoptic Technology and Falcon Energy 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 Falcon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexoptic Technology and Falcon Energy.

Diversification Opportunities for Nexoptic Technology and Falcon Energy

0.55

Correlation Coefficient

Nexoptic Technology  Falcon Energy

Very weak diversification

The 3 months correlation between Nexoptic and Falcon is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Nexoptic Technology Corp and Falcon Energy Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Falcon Energy Materials 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 Falcon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Falcon Energy Materials has no effect on the direction of Nexoptic Technology i.e., Nexoptic Technology and Falcon Energy go up and down completely randomly.

Pair Corralation between Nexoptic Technology and Falcon Energy

Assuming the 90 days horizon Nexoptic Technology is expected to generate 1.44 times less return on investment than Falcon Energy. In addition to that, Nexoptic Technology is 2.34 times more volatile than Falcon Energy Materials. It trades about 0.05 of its total potential returns per unit of risk. Falcon Energy Materials is currently generating about 0.18 per unit of volatility. If you would invest  69.00  in Falcon Energy Materials on September 4, 2024 and sell it today you would earn a total of  12.00  from holding Falcon Energy Materials or generate 17.39% return on investment over 90 days.

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

Nexoptic Technology Corp  vs.  Falcon Energy Materials

Nexoptic Technology Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nexoptic Technology Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Nexoptic Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Falcon Energy Materials

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with Nexoptic Technology and Falcon Energy

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

The idea behind Nexoptic Technology Corp and Falcon Energy Materials 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.