Correlation Between Wialan Technologies and Nextmart

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

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

Diversification Opportunities for Wialan Technologies and Nextmart

0.55

Correlation Coefficient

Wialan Technologies  Nextmart

Very weak diversification

The 3 months correlation between Wialan and Nextmart is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Wialan Technologies and Nextmart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextmart and Wialan Technologies 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 Wialan Technologies 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 Wialan Technologies i.e., Wialan Technologies and Nextmart go up and down completely randomly.

Pair Corralation between Wialan Technologies and Nextmart

Given the investment horizon of 90 days Wialan Technologies is expected to under-perform the Nextmart. But the pink sheet apears to be less risky and, when comparing its historical volatility, Wialan Technologies is 6.76 times less risky than Nextmart. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Nextmart is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  0.14  in Nextmart on October 11, 2024 and sell it today you would lose (0.08) from holding Nextmart or give up 57.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Wialan Technologies  vs.  Nextmart

Wialan Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wialan Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Nextmart

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nextmart are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent primary indicators, Nextmart reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Wialan Technologies and Nextmart

The main advantage of trading using opposite Wialan Technologies and Nextmart positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wialan Technologies 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 Wialan Technologies 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.