Correlation Between Neo Neon and BH Global

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

By analyzing existing cross correlation between Neo Neon Holdings Limited and BH Global, you can compare the effects of market volatilities on Neo Neon and BH Global 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 Neo Neon with a short position of BH Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Neon and BH Global.

Diversification Opportunities for Neo Neon and BH Global

0.29

Correlation Coefficient

Neo Neon  BH Global

Modest diversification

The 3 months correlation between Neo and 911608 is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Neo Neon Holdings Limited and BH Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Global and Neo Neon 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 Neo Neon Holdings Limited are associated (or correlated) with BH Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Global has no effect on the direction of Neo Neon i.e., Neo Neon and BH Global go up and down completely randomly.

Pair Corralation between Neo Neon and BH Global

Assuming the 90 days trading horizon Neo Neon Holdings Limited is expected to generate 0.89 times more return on investment than BH Global. However, Neo Neon Holdings Limited is 1.12 times less risky than BH Global. It trades about 0.06 of its potential returns per unit of risk. BH Global is currently generating about 0.05 per unit of risk. If you would invest  123.00  in Neo Neon Holdings Limited on September 13, 2024 and sell it today you would earn a total of  28.00  from holding Neo Neon Holdings Limited or generate 22.76% return on investment over 90 days.

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

Neo Neon Holdings Limited  vs.  BH Global

Neo Neon Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Neo Neon Holdings Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Neo Neon is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BH Global

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BH Global are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, BH Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Neo Neon and BH Global

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

The idea behind Neo Neon Holdings Limited and BH Global 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.