Correlation Between New Concept and Southcorp Capital

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

Diversification Opportunities for New Concept and Southcorp Capital

0.22

Correlation Coefficient

New Concept  Southcorp Capital

Modest diversification

The 3 months correlation between New and Southcorp is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding New Concept Energy and Southcorp Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southcorp Capital 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 Southcorp Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southcorp Capital has no effect on the direction of New Concept i.e., New Concept and Southcorp Capital go up and down completely randomly.

Pair Corralation between New Concept and Southcorp Capital

Considering the 90-day investment horizon New Concept is expected to generate 324.18 times less return on investment than Southcorp Capital. But when comparing it to its historical volatility, New Concept Energy is 40.18 times less risky than Southcorp Capital. It trades about 0.02 of its potential returns per unit of risk. Southcorp Capital is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.40  in Southcorp Capital on October 11, 2024 and sell it today you would lose (0.38) from holding Southcorp Capital or give up 95.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

New Concept Energy  vs.  Southcorp Capital

New Concept Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Concept Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Southcorp Capital

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Southcorp Capital are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical indicators, Southcorp Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with New Concept and Southcorp Capital

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

The idea behind New Concept Energy and Southcorp 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.