Correlation Between Creotech Instruments and New Tech

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

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

Diversification Opportunities for Creotech Instruments and New Tech

-0.59

Correlation Coefficient

Creotech Instruments  New Tech

Excellent diversification

The 3 months correlation between Creotech and New is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Creotech Instruments SA and New Tech Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Tech Capital and Creotech Instruments 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 Creotech Instruments SA are associated (or correlated) with New Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Tech Capital has no effect on the direction of Creotech Instruments i.e., Creotech Instruments and New Tech go up and down completely randomly.

Pair Corralation between Creotech Instruments and New Tech

Assuming the 90 days trading horizon Creotech Instruments SA is expected to generate 0.91 times more return on investment than New Tech. However, Creotech Instruments SA is 1.09 times less risky than New Tech. It trades about 0.17 of its potential returns per unit of risk. New Tech Capital is currently generating about -0.08 per unit of risk. If you would invest  14,500  in Creotech Instruments SA on October 26, 2024 and sell it today you would earn a total of  4,450  from holding Creotech Instruments SA or generate 30.69% return on investment over 90 days.

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

Creotech Instruments SA  vs.  New Tech Capital

Creotech Instruments

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Creotech Instruments SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Creotech Instruments reported solid returns over the last few months and may actually be approaching a breakup point.

New Tech Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Tech Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Creotech Instruments and New Tech

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

The idea behind Creotech Instruments SA and New Tech Capital 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.