Correlation Between NewFlex Technology and SKONEC Entertainment

Can any of the company-specific risk be diversified away by investing in both NewFlex Technology and SKONEC Entertainment 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 SKONEC Entertainment 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 SKONEC Entertainment Co, you can compare the effects of market volatilities on NewFlex Technology and SKONEC Entertainment 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 SKONEC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewFlex Technology and SKONEC Entertainment.

Diversification Opportunities for NewFlex Technology and SKONEC Entertainment

0.88

Correlation Coefficient

NewFlex Technology  SKONEC Entertainment

Very poor diversification

The 3 months correlation between NewFlex and SKONEC is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding NewFlex Technology Co and SKONEC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SKONEC Entertainment 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 SKONEC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SKONEC Entertainment has no effect on the direction of NewFlex Technology i.e., NewFlex Technology and SKONEC Entertainment go up and down completely randomly.

Pair Corralation between NewFlex Technology and SKONEC Entertainment

Assuming the 90 days trading horizon NewFlex Technology Co is expected to under-perform the SKONEC Entertainment. In addition to that, NewFlex Technology is 1.06 times more volatile than SKONEC Entertainment Co. It trades about -0.06 of its total potential returns per unit of risk. SKONEC Entertainment Co is currently generating about -0.02 per unit of volatility. If you would invest  371,500  in SKONEC Entertainment Co on October 7, 2024 and sell it today you would lose (29,000) from holding SKONEC Entertainment Co or give up 7.81% of portfolio value over 90 days.

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

NewFlex Technology Co  vs.  SKONEC Entertainment Co

NewFlex Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NewFlex Technology Co 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.

SKONEC Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SKONEC Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SKONEC Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NewFlex Technology and SKONEC Entertainment

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

The idea behind NewFlex Technology Co and SKONEC Entertainment Co 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..