Correlation Between PING and NXT

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

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

Diversification Opportunities for PING and NXT

0.0

Correlation Coefficient

PING  NXT

Pay attention - limited upside

The 3 months correlation between PING and NXT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PING and NXT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXT and PING 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 PING are associated (or correlated) with NXT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXT has no effect on the direction of PING i.e., PING and NXT go up and down completely randomly.

Pair Corralation between PING and NXT

If you would invest (100.00) in PING on November 27, 2024 and sell it today you would earn a total of  100.00  from holding PING or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PING  vs.  NXT

PING

Risk-Adjusted Performance

Very Weak

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

NXT

Risk-Adjusted Performance

Very Weak

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

Pair Trading with PING and NXT

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

The idea behind PING and NXT 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.

Check out your portfolio center.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.