Correlation Between New Concept and La Rosa

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

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

Diversification Opportunities for New Concept and La Rosa

-0.08

Correlation Coefficient

New Concept  La Rosa

Good diversification

The 3 months correlation between New and LRHC is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding New Concept Energy and La Rosa Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on La Rosa Holdings and New Concept 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 New Concept Energy are associated (or correlated) with La Rosa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of La Rosa Holdings has no effect on the direction of New Concept i.e., New Concept and La Rosa go up and down completely randomly.

Pair Corralation between New Concept and La Rosa

Considering the 90-day investment horizon New Concept is expected to generate 73.78 times less return on investment than La Rosa. But when comparing it to its historical volatility, New Concept Energy is 5.85 times less risky than La Rosa. It trades about 0.0 of its potential returns per unit of risk. La Rosa Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  99.00  in La Rosa Holdings on August 31, 2024 and sell it today you would lose (33.00) from holding La Rosa Holdings or give up 33.33% of portfolio value over 90 days.

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

New Concept Energy  vs.  La Rosa Holdings

New Concept Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Concept Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, New Concept is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

La Rosa Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in La Rosa Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical indicators, La Rosa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Concept and La Rosa

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

The idea behind New Concept Energy and La Rosa Holdings 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.