Correlation Between PACIFIC ONLINE and NORTHEAST UTILITIES

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

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

Diversification Opportunities for PACIFIC ONLINE and NORTHEAST UTILITIES

0.0

Correlation Coefficient

PACIFIC ONLINE  NORTHEAST UTILITIES

Pay attention - limited upside

The 3 months correlation between PACIFIC and NORTHEAST is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PACIFIC ONLINE and NORTHEAST UTILITIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORTHEAST UTILITIES and PACIFIC ONLINE 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 PACIFIC ONLINE are associated (or correlated) with NORTHEAST UTILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORTHEAST UTILITIES has no effect on the direction of PACIFIC ONLINE i.e., PACIFIC ONLINE and NORTHEAST UTILITIES go up and down completely randomly.

Pair Corralation between PACIFIC ONLINE and NORTHEAST UTILITIES

If you would invest  15.00  in PACIFIC ONLINE on October 26, 2024 and sell it today you would earn a total of  0.00  from holding PACIFIC ONLINE or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PACIFIC ONLINE  vs.  NORTHEAST UTILITIES

PACIFIC ONLINE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC ONLINE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, PACIFIC ONLINE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

NORTHEAST UTILITIES

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PACIFIC ONLINE and NORTHEAST UTILITIES

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

The idea behind PACIFIC ONLINE and NORTHEAST UTILITIES 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.