Correlation Between Nayax and Formula Systems

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

By analyzing existing cross correlation between Nayax and Formula Systems 1985, you can compare the effects of market volatilities on Nayax and Formula Systems 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 Nayax with a short position of Formula Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nayax and Formula Systems.

Diversification Opportunities for Nayax and Formula Systems

0.49

Correlation Coefficient

Nayax  Formula Systems

Very weak diversification

The 3 months correlation between Nayax and Formula is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nayax and Formula Systems 1985 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formula Systems 1985 and Nayax 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 Nayax are associated (or correlated) with Formula Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formula Systems 1985 has no effect on the direction of Nayax i.e., Nayax and Formula Systems go up and down completely randomly.

Pair Corralation between Nayax and Formula Systems

Given the investment horizon of 90 days Nayax is expected to generate 1.11 times more return on investment than Formula Systems. However, Nayax is 1.11 times more volatile than Formula Systems 1985. It trades about 0.12 of its potential returns per unit of risk. Formula Systems 1985 is currently generating about 0.01 per unit of risk. If you would invest  2,871  in Nayax on December 29, 2024 and sell it today you would earn a total of  519.00  from holding Nayax or generate 18.08% return on investment over 90 days.

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

Nayax  vs.  Formula Systems 1985

Nayax

Risk-Adjusted Performance

OK

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

Formula Systems 1985

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Formula Systems 1985 are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Formula Systems is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nayax and Formula Systems

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

The idea behind Nayax and Formula Systems 1985 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.