Correlation Between EN Shoham and Nextcom

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

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

Diversification Opportunities for EN Shoham and Nextcom

0.25

Correlation Coefficient

EN Shoham  Nextcom

Modest diversification

The 3 months correlation between SHOM and Nextcom is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding EN Shoham Business and Nextcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextcom and EN Shoham 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 EN Shoham Business are associated (or correlated) with Nextcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextcom has no effect on the direction of EN Shoham i.e., EN Shoham and Nextcom go up and down completely randomly.

Pair Corralation between EN Shoham and Nextcom

Assuming the 90 days trading horizon EN Shoham is expected to generate 1.27 times less return on investment than Nextcom. But when comparing it to its historical volatility, EN Shoham Business is 1.73 times less risky than Nextcom. It trades about 0.24 of its potential returns per unit of risk. Nextcom is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  72,550  in Nextcom on April 22, 2025 and sell it today you would earn a total of  22,030  from holding Nextcom or generate 30.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.0%
Values	Daily Returns

EN Shoham Business  vs.  Nextcom

EN Shoham Business

Risk-Adjusted Performance

Solid

Over the last 90 days EN Shoham Business has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, EN Shoham sustained solid returns over the last few months and may actually be approaching a breakup point.

Nextcom

Risk-Adjusted Performance

Good

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

Pair Trading with EN Shoham and Nextcom

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

The idea behind EN Shoham Business and Nextcom 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.