Correlation Between Aware and Next Technology
Can any of the company-specific risk be diversified away by investing in both Aware and Next Technology 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 Aware and Next Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aware Inc and Next Technology Holding, you can compare the effects of market volatilities on Aware and Next Technology 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 Aware with a short position of Next Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aware and Next Technology.
Diversification Opportunities for Aware and Next Technology
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aware and Next is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and Next Technology Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Next Technology Holding and Aware 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 Aware Inc are associated (or correlated) with Next Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Next Technology Holding has no effect on the direction of Aware i.e., Aware and Next Technology go up and down completely randomly.
Pair Corralation between Aware and Next Technology
Given the investment horizon of 90 days Aware Inc is expected to generate 0.28 times more return on investment than Next Technology. However, Aware Inc is 3.56 times less risky than Next Technology. It trades about 0.03 of its potential returns per unit of risk. Next Technology Holding is currently generating about -0.11 per unit of risk. If you would invest 216.00 in Aware Inc on August 30, 2025 and sell it today you would earn a total of 3.00 from holding Aware Inc or generate 1.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aware Inc vs. Next Technology Holding
Performance |
| Timeline |
| Aware Inc |
| Next Technology Holding |
Aware and Next Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aware and Next Technology
The main advantage of trading using opposite Aware and Next Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aware position performs unexpectedly, Next Technology 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 Next Technology will offset losses from the drop in Next Technology's long position.| Aware vs. JD Sports Fashion | Aware vs. Tencent Music Entertainment | Aware vs. Heritage Insurance Hldgs | Aware vs. Slide Insurance Holdings, |
| Next Technology vs. HF Sinclair Corp | Next Technology vs. CanSino Biologics | Next Technology vs. Sims Metal Management | Next Technology vs. Greentown Management Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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