Correlation Between Newretail and Power Wind

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

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

Diversification Opportunities for Newretail and Power Wind

-0.58

Correlation Coefficient

Newretail  Power Wind

Excellent diversification

The 3 months correlation between Newretail and Power is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and Power Wind Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Wind Health and Newretail 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 Newretail Co are associated (or correlated) with Power Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Wind Health has no effect on the direction of Newretail i.e., Newretail and Power Wind go up and down completely randomly.

Pair Corralation between Newretail and Power Wind

Assuming the 90 days trading horizon Newretail Co is expected to generate 2.53 times more return on investment than Power Wind. However, Newretail is 2.53 times more volatile than Power Wind Health. It trades about 0.03 of its potential returns per unit of risk. Power Wind Health is currently generating about -0.01 per unit of risk. If you would invest  2,180  in Newretail Co on October 21, 2024 and sell it today you would earn a total of  440.00  from holding Newretail Co or generate 20.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Newretail Co  vs.  Power Wind Health

Newretail

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newretail Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Newretail showed solid returns over the last few months and may actually be approaching a breakup point.

Power Wind Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Wind Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Power Wind is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Newretail and Power Wind

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

The idea behind Newretail Co and Power Wind Health 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.