Correlation Between Nextplat Corp and Paysafe

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

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

Diversification Opportunities for Nextplat Corp and Paysafe

0.59

Correlation Coefficient

Nextplat Corp  Paysafe

Very weak diversification

The 3 months correlation between Nextplat and Paysafe is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nextplat Corp and Paysafe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paysafe and Nextplat Corp 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 Nextplat Corp are associated (or correlated) with Paysafe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paysafe has no effect on the direction of Nextplat Corp i.e., Nextplat Corp and Paysafe go up and down completely randomly.

Pair Corralation between Nextplat Corp and Paysafe

Given the investment horizon of 90 days Nextplat Corp is expected to under-perform the Paysafe. In addition to that, Nextplat Corp is 1.27 times more volatile than Paysafe. It trades about -0.11 of its total potential returns per unit of risk. Paysafe is currently generating about -0.01 per unit of volatility. If you would invest  2,170  in Paysafe on September 2, 2024 and sell it today you would lose (182.00) from holding Paysafe or give up 8.39% of portfolio value over 90 days.

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

Nextplat Corp  vs.  Paysafe

Nextplat Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextplat Corp 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 basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Paysafe

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paysafe has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Paysafe is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Nextplat Corp and Paysafe

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

The idea behind Nextplat Corp and Paysafe 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.