Correlation Between NEXTDC and Uber Technologies

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

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

Diversification Opportunities for NEXTDC and Uber Technologies

0.66

Correlation Coefficient

NEXTDC  Uber Technologies

Poor diversification

The 3 months correlation between NEXTDC and Uber is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding NEXTDC LTD and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies and NEXTDC 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 NEXTDC LTD are associated (or correlated) with Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of NEXTDC i.e., NEXTDC and Uber Technologies go up and down completely randomly.

Pair Corralation between NEXTDC and Uber Technologies

Assuming the 90 days horizon NEXTDC LTD is expected to generate 1.23 times more return on investment than Uber Technologies. However, NEXTDC is 1.23 times more volatile than Uber Technologies. It trades about 0.16 of its potential returns per unit of risk. Uber Technologies is currently generating about 0.11 per unit of risk. If you would invest  595.00  in NEXTDC LTD on April 24, 2025 and sell it today you would earn a total of  185.00  from holding NEXTDC LTD or generate 31.09% return on investment over 90 days.

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

NEXTDC LTD  vs.  Uber Technologies

NEXTDC LTD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NEXTDC LTD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NEXTDC reported solid returns over the last few months and may actually be approaching a breakup point.

Uber Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Uber Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Uber Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NEXTDC and Uber Technologies

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

The idea behind NEXTDC LTD and Uber Technologies 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.