Correlation Between Cherrybro CoLtd and Newtree CoLtd

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

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

Diversification Opportunities for Cherrybro CoLtd and Newtree CoLtd

-0.53

Correlation Coefficient

Cherrybro CoLtd  Newtree CoLtd

Excellent diversification

The 3 months correlation between Cherrybro and Newtree is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Cherrybro coLtd and Newtree CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtree CoLtd and Cherrybro CoLtd 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 Cherrybro coLtd are associated (or correlated) with Newtree CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtree CoLtd has no effect on the direction of Cherrybro CoLtd i.e., Cherrybro CoLtd and Newtree CoLtd go up and down completely randomly.

Pair Corralation between Cherrybro CoLtd and Newtree CoLtd

Assuming the 90 days trading horizon Cherrybro coLtd is expected to generate 1.19 times more return on investment than Newtree CoLtd. However, Cherrybro CoLtd is 1.19 times more volatile than Newtree CoLtd. It trades about 0.27 of its potential returns per unit of risk. Newtree CoLtd is currently generating about 0.15 per unit of risk. If you would invest  71,700  in Cherrybro coLtd on October 10, 2024 and sell it today you would earn a total of  10,200  from holding Cherrybro coLtd or generate 14.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.0%
Values	Daily Returns

Cherrybro coLtd  vs.  Newtree CoLtd

Cherrybro coLtd

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cherrybro coLtd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cherrybro CoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Newtree CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newtree CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Cherrybro CoLtd and Newtree CoLtd

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

The idea behind Cherrybro coLtd and Newtree CoLtd 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 CEOs Directory module to screen CEOs from public companies around the world.