Correlation Between Columbus and Newcap Holding

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

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

Diversification Opportunities for Columbus and Newcap Holding

0.04

Correlation Coefficient

Columbus  Newcap Holding

Significant diversification

The 3 months correlation between Columbus and Newcap is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Columbus AS and Newcap Holding AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcap Holding AS and Columbus 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 Columbus AS are associated (or correlated) with Newcap Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcap Holding AS has no effect on the direction of Columbus i.e., Columbus and Newcap Holding go up and down completely randomly.

Pair Corralation between Columbus and Newcap Holding

Assuming the 90 days trading horizon Columbus AS is expected to generate 0.95 times more return on investment than Newcap Holding. However, Columbus AS is 1.05 times less risky than Newcap Holding. It trades about 0.22 of its potential returns per unit of risk. Newcap Holding AS is currently generating about 0.0 per unit of risk. If you would invest  1,000.00  in Columbus AS on October 22, 2024 and sell it today you would earn a total of  115.00  from holding Columbus AS or generate 11.5% return on investment over 90 days.

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

Columbus AS  vs.  Newcap Holding AS

Columbus AS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Columbus AS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Columbus is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Newcap Holding AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newcap Holding AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Newcap Holding is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Columbus and Newcap Holding

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

The idea behind Columbus AS and Newcap Holding AS 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 CEOs Directory module to screen CEOs from public companies around the world.