Correlation Between PLAIDInc and NextPlat Corp

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

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

Diversification Opportunities for PLAIDInc and NextPlat Corp

-0.31

Correlation Coefficient

PLAIDInc  NextPlat Corp

Very good diversification

The 3 months correlation between PLAIDInc and NextPlat is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding PLAIDInc and NextPlat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextPlat Corp and PLAIDInc 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 PLAIDInc are associated (or correlated) with NextPlat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextPlat Corp has no effect on the direction of PLAIDInc i.e., PLAIDInc and NextPlat Corp go up and down completely randomly.

Pair Corralation between PLAIDInc and NextPlat Corp

Assuming the 90 days horizon PLAIDInc is expected to generate 52.36 times less return on investment than NextPlat Corp. But when comparing it to its historical volatility, PLAIDInc is 52.62 times less risky than NextPlat Corp. It trades about 0.09 of its potential returns per unit of risk. NextPlat Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  31.00  in NextPlat Corp on September 30, 2024 and sell it today you would lose (22.00) from holding NextPlat Corp or give up 70.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.31%
Values	Daily Returns

PLAIDInc  vs.  NextPlat Corp

PLAIDInc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAIDInc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward indicators, PLAIDInc reported solid returns over the last few months and may actually be approaching a breakup point.

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 fairly stable essential indicators, NextPlat Corp is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with PLAIDInc and NextPlat Corp

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

The idea behind PLAIDInc and NextPlat Corp 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.