Correlation Between New Concept and Newmark

Can any of the company-specific risk be diversified away by investing in both New Concept and Newmark 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 Newmark 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 Newmark Group, you can compare the effects of market volatilities on New Concept and Newmark 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 Newmark. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Concept and Newmark.

Diversification Opportunities for New Concept and Newmark

-0.11

Correlation Coefficient

New Concept  Newmark

Good diversification

The 3 months correlation between New and Newmark is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding New Concept Energy and Newmark Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newmark Group 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 Newmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newmark Group has no effect on the direction of New Concept i.e., New Concept and Newmark go up and down completely randomly.

Pair Corralation between New Concept and Newmark

Considering the 90-day investment horizon New Concept is expected to generate 64.35 times less return on investment than Newmark. In addition to that, New Concept is 1.67 times more volatile than Newmark Group. It trades about 0.0 of its total potential returns per unit of risk. Newmark Group is currently generating about 0.11 per unit of volatility. If you would invest  1,376  in Newmark Group on September 2, 2024 and sell it today you would earn a total of  172.00  from holding Newmark Group or generate 12.5% return on investment over 90 days.

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

New Concept Energy  vs.  Newmark Group

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.

Newmark Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Newmark Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Newmark may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with New Concept and Newmark

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

The idea behind New Concept Energy and Newmark Group 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.