Correlation Between Snipp Interactive and Nextmart

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

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

Diversification Opportunities for Snipp Interactive and Nextmart

-0.19

Correlation Coefficient

Snipp Interactive  Nextmart

Good diversification

The 3 months correlation between Snipp and Nextmart is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Snipp Interactive and Nextmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextmart and Snipp Interactive 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 Snipp Interactive are associated (or correlated) with Nextmart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextmart has no effect on the direction of Snipp Interactive i.e., Snipp Interactive and Nextmart go up and down completely randomly.

Pair Corralation between Snipp Interactive and Nextmart

Assuming the 90 days horizon Snipp Interactive is expected to generate 0.3 times more return on investment than Nextmart. However, Snipp Interactive is 3.3 times less risky than Nextmart. It trades about 0.15 of its potential returns per unit of risk. Nextmart is currently generating about 0.03 per unit of risk. If you would invest  4.42  in Snipp Interactive on September 22, 2024 and sell it today you would earn a total of  2.19  from holding Snipp Interactive or generate 49.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.73%
Values	Daily Returns

Snipp Interactive  vs.  Nextmart

Snipp Interactive

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Snipp Interactive are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Snipp Interactive reported solid returns over the last few months and may actually be approaching a breakup point.

Nextmart

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nextmart are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Nextmart reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Snipp Interactive and Nextmart

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

The idea behind Snipp Interactive and Nextmart 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.