Correlation Between NewFlex Technology and Global Standard

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

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

Diversification Opportunities for NewFlex Technology and Global Standard

0.63

Correlation Coefficient

NewFlex Technology  Global Standard

Poor diversification

The 3 months correlation between NewFlex and Global is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding NewFlex Technology Co and Global Standard Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Standard Tech and NewFlex 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 NewFlex Technology Co are associated (or correlated) with Global Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Standard Tech has no effect on the direction of NewFlex Technology i.e., NewFlex Technology and Global Standard go up and down completely randomly.

Pair Corralation between NewFlex Technology and Global Standard

Assuming the 90 days trading horizon NewFlex Technology Co is expected to under-perform the Global Standard. But the stock apears to be less risky and, when comparing its historical volatility, NewFlex Technology Co is 1.11 times less risky than Global Standard. The stock trades about -0.06 of its potential returns per unit of risk. The Global Standard Technology is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,664,000  in Global Standard Technology on December 2, 2024 and sell it today you would earn a total of  356,000  from holding Global Standard Technology or generate 21.39% return on investment over 90 days.

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

NewFlex Technology Co  vs.  Global Standard Technology

NewFlex Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NewFlex Technology Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NewFlex Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Global Standard Tech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global Standard Technology are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Global Standard sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NewFlex Technology and Global Standard

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

The idea behind NewFlex Technology Co and Global Standard Technology 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.