Correlation Between Klaytn and NXS

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

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

Diversification Opportunities for Klaytn and NXS

0.57

Correlation Coefficient

Klaytn  NXS

Very weak diversification

The 3 months correlation between Klaytn and NXS is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Klaytn and NXS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXS and Klaytn 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 Klaytn are associated (or correlated) with NXS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXS has no effect on the direction of Klaytn i.e., Klaytn and NXS go up and down completely randomly.

Pair Corralation between Klaytn and NXS

Assuming the 90 days trading horizon Klaytn is expected to under-perform the NXS. In addition to that, Klaytn is 1.63 times more volatile than NXS. It trades about -0.15 of its total potential returns per unit of risk. NXS is currently generating about -0.07 per unit of volatility. If you would invest  16.00  in NXS on January 30, 2024 and sell it today you would lose (1.00) from holding NXS or give up 6.25% of portfolio value over 90 days.

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

Klaytn  vs.  NXS

Klaytn

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Klaytn are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Klaytn may actually be approaching a critical reversion point that can send shares even higher in May 2024.

NXS

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NXS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, NXS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Klaytn and NXS

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

The idea behind Klaytn and NXS 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.