Correlation Between SinglePoint and Nextracker

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

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

Diversification Opportunities for SinglePoint and Nextracker

-0.08

Correlation Coefficient

SinglePoint  Nextracker

Good diversification

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

Pair Corralation between SinglePoint and Nextracker

Given the investment horizon of 90 days SinglePoint is expected to generate 14.84 times more return on investment than Nextracker. However, SinglePoint is 14.84 times more volatile than Nextracker Class A. It trades about 0.45 of its potential returns per unit of risk. Nextracker Class A is currently generating about -0.05 per unit of risk. If you would invest  0.90  in SinglePoint on September 16, 2024 and sell it today you would earn a total of  2.70  from holding SinglePoint or generate 300.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.45%
Values	Daily Returns

SinglePoint  vs.  Nextracker Class A

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.

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.

Pair Trading with SinglePoint and Nextracker

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

The idea behind SinglePoint and Nextracker Class A 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.