Correlation Between NextPlat Corp and Kainos Group

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

By analyzing existing cross correlation between NextPlat Corp and Kainos Group plc, you can compare the effects of market volatilities on NextPlat Corp and Kainos Group 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 Kainos Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextPlat Corp and Kainos Group.

Diversification Opportunities for NextPlat Corp and Kainos Group

0.57

Correlation Coefficient

NextPlat Corp  Kainos Group

Very weak diversification

The 3 months correlation between NextPlat and Kainos is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NextPlat Corp and Kainos Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kainos Group plc 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 Kainos Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kainos Group plc has no effect on the direction of NextPlat Corp i.e., NextPlat Corp and Kainos Group go up and down completely randomly.

Pair Corralation between NextPlat Corp and Kainos Group

Assuming the 90 days horizon NextPlat Corp is expected to generate 6.56 times more return on investment than Kainos Group. However, NextPlat Corp is 6.56 times more volatile than Kainos Group plc. It trades about 0.06 of its potential returns per unit of risk. Kainos Group plc is currently generating about 0.05 per unit of risk. If you would invest  20.00  in NextPlat Corp on September 24, 2024 and sell it today you would lose (8.00) from holding NextPlat Corp or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.0%
Values	Daily Returns

NextPlat Corp  vs.  Kainos Group plc

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. In spite of conflicting performance in the last few months, the Stock's essential indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Kainos Group plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kainos Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic 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 NextPlat Corp and Kainos Group

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

The idea behind NextPlat Corp and Kainos Group plc 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.