Correlation Between Nexoptic Technology and Senvest Capital

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

Diversification Opportunities for Nexoptic Technology and Senvest Capital

-0.29

Correlation Coefficient

Nexoptic Technology  Senvest Capital

Very good diversification

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

Pair Corralation between Nexoptic Technology and Senvest Capital

Assuming the 90 days horizon Nexoptic Technology Corp is expected to generate 21.36 times more return on investment than Senvest Capital. However, Nexoptic Technology is 21.36 times more volatile than Senvest Capital. It trades about 0.07 of its potential returns per unit of risk. Senvest Capital is currently generating about 0.04 per unit of risk. If you would invest  2.00  in Nexoptic Technology Corp on December 30, 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 Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Nexoptic Technology Corp  vs.  Senvest Capital

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 abnormal basic indicators, Nexoptic Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Senvest Capital

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Senvest Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Senvest Capital is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nexoptic Technology and Senvest Capital

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

The idea behind Nexoptic Technology Corp and Senvest Capital 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.