Correlation Between Nextracker and SinglePoint

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

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

Diversification Opportunities for Nextracker and SinglePoint

-0.08

Correlation Coefficient

Nextracker  SinglePoint

Good diversification

The 3 months correlation between Nextracker and SinglePoint is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Nextracker Class A and SinglePoint in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SinglePoint and Nextracker 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 Nextracker Class A are associated (or correlated) with SinglePoint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SinglePoint has no effect on the direction of Nextracker i.e., Nextracker and SinglePoint go up and down completely randomly.

Pair Corralation between Nextracker and SinglePoint

Considering the 90-day investment horizon Nextracker is expected to generate 15.96 times less return on investment than SinglePoint. But when comparing it to its historical volatility, Nextracker Class A is 5.5 times less risky than SinglePoint. It trades about 0.0 of its potential returns per unit of risk. SinglePoint is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  9.00  in SinglePoint on September 16, 2024 and sell it today you would lose (5.40) from holding SinglePoint or give up 60.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

Nextracker Class A  vs.  SinglePoint

Nextracker Class A

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nextracker Class A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nextracker is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

SinglePoint

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SinglePoint has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly inconsistent basic indicators, SinglePoint reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nextracker and SinglePoint

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

The idea behind Nextracker Class A and SinglePoint 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.