Correlation Between Carebook Technologies and Newtopia

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

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

Diversification Opportunities for Carebook Technologies and Newtopia

0.34

Correlation Coefficient

Carebook Technologies  Newtopia

Weak diversification

The 3 months correlation between Carebook and Newtopia is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Carebook Technologies and Newtopia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtopia and Carebook Technologies 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 Carebook Technologies are associated (or correlated) with Newtopia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtopia has no effect on the direction of Carebook Technologies i.e., Carebook Technologies and Newtopia go up and down completely randomly.

Pair Corralation between Carebook Technologies and Newtopia

Assuming the 90 days trading horizon Carebook Technologies is expected to generate 0.81 times more return on investment than Newtopia. However, Carebook Technologies is 1.23 times less risky than Newtopia. It trades about 0.06 of its potential returns per unit of risk. Newtopia is currently generating about -0.04 per unit of risk. If you would invest  8.00  in Carebook Technologies on October 8, 2024 and sell it today you would earn a total of  1.50  from holding Carebook Technologies or generate 18.75% return on investment over 90 days.

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

Carebook Technologies  vs.  Newtopia

Carebook Technologies

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Carebook Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating fundamental drivers, Carebook Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Newtopia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newtopia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Carebook Technologies and Newtopia

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

The idea behind Carebook Technologies and Newtopia 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.