Correlation Between NYSE New and 51Talk Online

Can any of the company-specific risk be diversified away by investing in both NYSE New and 51Talk Online 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 NYSE New and 51Talk Online into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NYSE New Highs and 51Talk Online Education, you can compare the effects of market volatilities on NYSE New and 51Talk Online 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 NYSE New with a short position of 51Talk Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE New and 51Talk Online.

Diversification Opportunities for NYSE New and 51Talk Online

0.09

Correlation Coefficient

NYSE New  51Talk Online

Significant diversification

The 3 months correlation between NYSE and 51Talk is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding NYSE New Highs and 51Talk Online Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 51Talk Online Education and NYSE New 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 NYSE New Highs are associated (or correlated) with 51Talk Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 51Talk Online Education has no effect on the direction of NYSE New i.e., NYSE New and 51Talk Online go up and down completely randomly.

Pair Corralation between NYSE New and 51Talk Online

Assuming the 90 days trading horizon NYSE New Highs is expected to generate 13.78 times more return on investment than 51Talk Online. However, NYSE New is 13.78 times more volatile than 51Talk Online Education. It trades about 0.24 of its potential returns per unit of risk. 51Talk Online Education is currently generating about 0.07 per unit of risk. If you would invest  1,900  in NYSE New Highs on September 12, 2024 and sell it today you would earn a total of  2,300  from holding NYSE New Highs or generate 121.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

NYSE New Highs  vs.  51Talk Online Education

Pair Trading with NYSE New and 51Talk Online

The main advantage of trading using opposite NYSE New and 51Talk Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE New position performs unexpectedly, 51Talk Online 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 51Talk Online will offset losses from the drop in 51Talk Online's long position.

The idea behind NYSE New Highs and 51Talk Online Education 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 Global Correlations module to find global opportunities by holding instruments from different markets.