Correlation Between Carlton Investments and New Hope

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

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

Diversification Opportunities for Carlton Investments and New Hope

-0.7

Correlation Coefficient

Carlton Investments  New Hope

Excellent diversification

The 3 months correlation between Carlton and New is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Carlton Investments and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope and Carlton Investments 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 Carlton Investments are associated (or correlated) with New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope has no effect on the direction of Carlton Investments i.e., Carlton Investments and New Hope go up and down completely randomly.

Pair Corralation between Carlton Investments and New Hope

Assuming the 90 days trading horizon Carlton Investments is expected to generate 0.46 times more return on investment than New Hope. However, Carlton Investments is 2.17 times less risky than New Hope. It trades about 0.06 of its potential returns per unit of risk. New Hope is currently generating about -0.11 per unit of risk. If you would invest  2,973  in Carlton Investments on December 21, 2024 and sell it today you would earn a total of  110.00  from holding Carlton Investments or generate 3.7% return on investment over 90 days.

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

Carlton Investments  vs.  New Hope

Carlton Investments

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Carlton Investments are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Carlton Investments is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

New Hope

Risk-Adjusted Performance

Very Weak

Over the last 90 days New Hope has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Carlton Investments and New Hope

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

The idea behind Carlton Investments and New Hope 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.