Correlation Between Verimatrix and Nacon Sa

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

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

Diversification Opportunities for Verimatrix and Nacon Sa

0.92

Correlation Coefficient

Verimatrix  Nacon Sa

Almost no diversification

The 3 months correlation between Verimatrix and Nacon is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Verimatrix and Nacon Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nacon Sa and Verimatrix 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 Verimatrix are associated (or correlated) with Nacon Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nacon Sa has no effect on the direction of Verimatrix i.e., Verimatrix and Nacon Sa go up and down completely randomly.

Pair Corralation between Verimatrix and Nacon Sa

Assuming the 90 days trading horizon Verimatrix is expected to generate 0.57 times more return on investment than Nacon Sa. However, Verimatrix is 1.76 times less risky than Nacon Sa. It trades about -0.29 of its potential returns per unit of risk. Nacon Sa is currently generating about -0.4 per unit of risk. If you would invest  38.00  in Verimatrix on August 31, 2024 and sell it today you would lose (8.00) from holding Verimatrix or give up 21.05% of portfolio value over 90 days.

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

Verimatrix  vs.  Nacon Sa

Verimatrix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Verimatrix has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Nacon Sa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nacon Sa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Verimatrix and Nacon Sa

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

The idea behind Verimatrix and Nacon Sa 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.