Correlation Between New Concept and Wetouch Technology

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

Diversification Opportunities for New Concept and Wetouch Technology

0.62

Correlation Coefficient

New Concept  Wetouch Technology

Poor diversification

The 3 months correlation between New and Wetouch is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding New Concept Energy and Wetouch Technology Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wetouch Technology Common 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 Wetouch Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wetouch Technology Common has no effect on the direction of New Concept i.e., New Concept and Wetouch Technology go up and down completely randomly.

Pair Corralation between New Concept and Wetouch Technology

Considering the 90-day investment horizon New Concept Energy is expected to under-perform the Wetouch Technology. But the stock apears to be less risky and, when comparing its historical volatility, New Concept Energy is 1.31 times less risky than Wetouch Technology. The stock trades about -0.11 of its potential returns per unit of risk. The Wetouch Technology Common is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  164.00  in Wetouch Technology Common on December 27, 2024 and sell it today you would lose (16.00) from holding Wetouch Technology Common or give up 9.76% of portfolio value over 90 days.

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

New Concept Energy  vs.  Wetouch Technology Common

New Concept Energy

Risk-Adjusted Performance

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 inconsistent performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Wetouch Technology Common

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wetouch Technology Common has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Wetouch Technology is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with New Concept and Wetouch Technology

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

The idea behind New Concept Energy and Wetouch Technology Common 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.