Correlation Between Next Technology and Shell PLC

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

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

Diversification Opportunities for Next Technology and Shell PLC

0.64

Correlation Coefficient

Next Technology  Shell PLC

Poor diversification

The 3 months correlation between Next and Shell is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Next Technology Holding and Shell PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell PLC and Next Technology 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 Next Technology Holding are associated (or correlated) with Shell PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell PLC has no effect on the direction of Next Technology i.e., Next Technology and Shell PLC go up and down completely randomly.

Pair Corralation between Next Technology and Shell PLC

Given the investment horizon of 90 days Next Technology Holding is expected to generate 28.0 times more return on investment than Shell PLC. However, Next Technology is 28.0 times more volatile than Shell PLC. It trades about 0.14 of its potential returns per unit of risk. Shell PLC is currently generating about 0.07 per unit of risk. If you would invest  30.00  in Next Technology Holding on April 24, 2025 and sell it today you would earn a total of  205.00  from holding Next Technology Holding or generate 683.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Next Technology Holding  vs.  Shell PLC

Next Technology Holding

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Next Technology Holding are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Next Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Shell PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shell PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Shell PLC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Next Technology and Shell PLC

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

The idea behind Next Technology Holding and Shell PLC 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.