Correlation Between NEW MILLENNIUM and Far East

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

By analyzing existing cross correlation between NEW MILLENNIUM IRON and Far East Horizon, you can compare the effects of market volatilities on NEW MILLENNIUM and Far East 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 NEW MILLENNIUM with a short position of Far East. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEW MILLENNIUM and Far East.

Diversification Opportunities for NEW MILLENNIUM and Far East

-0.76

Correlation Coefficient

NEW MILLENNIUM  Far East

Pay attention - limited upside

The 3 months correlation between NEW and Far is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding NEW MILLENNIUM IRON and Far East Horizon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far East Horizon and NEW MILLENNIUM 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 NEW MILLENNIUM IRON are associated (or correlated) with Far East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far East Horizon has no effect on the direction of NEW MILLENNIUM i.e., NEW MILLENNIUM and Far East go up and down completely randomly.

Pair Corralation between NEW MILLENNIUM and Far East

Assuming the 90 days trading horizon NEW MILLENNIUM IRON is expected to under-perform the Far East. But the stock apears to be less risky and, when comparing its historical volatility, NEW MILLENNIUM IRON is 1.41 times less risky than Far East. The stock trades about -0.08 of its potential returns per unit of risk. The Far East Horizon is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  63.00  in Far East Horizon on December 11, 2024 and sell it today you would earn a total of  5.00  from holding Far East Horizon or generate 7.94% return on investment over 90 days.

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

NEW MILLENNIUM IRON  vs.  Far East Horizon

NEW MILLENNIUM IRON

Risk-Adjusted Performance

Very Weak

Over the last 90 days NEW MILLENNIUM IRON has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Far East Horizon

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Far East Horizon are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Far East may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with NEW MILLENNIUM and Far East

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

The idea behind NEW MILLENNIUM IRON and Far East Horizon 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.