Correlation Between New Horizon and Trio Tech

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

By analyzing existing cross correlation between New Horizon Aircraft and Trio Tech International, you can compare the effects of market volatilities on New Horizon and Trio Tech 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 Horizon with a short position of Trio Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Horizon and Trio Tech.

Diversification Opportunities for New Horizon and Trio Tech

-0.58

Correlation Coefficient

New Horizon  Trio Tech

Excellent diversification

The 3 months correlation between New and Trio is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding New Horizon Aircraft and Trio Tech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trio Tech International and New Horizon 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 Horizon Aircraft are associated (or correlated) with Trio Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trio Tech International has no effect on the direction of New Horizon i.e., New Horizon and Trio Tech go up and down completely randomly.

Pair Corralation between New Horizon and Trio Tech

Assuming the 90 days horizon New Horizon Aircraft is expected to generate 7.7 times more return on investment than Trio Tech. However, New Horizon is 7.7 times more volatile than Trio Tech International. It trades about 0.17 of its potential returns per unit of risk. Trio Tech International is currently generating about 0.0 per unit of risk. If you would invest  2.28  in New Horizon Aircraft on October 10, 2024 and sell it today you would earn a total of  8.72  from holding New Horizon Aircraft or generate 382.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.24%
Values	Daily Returns

New Horizon Aircraft  vs.  Trio Tech International

New Horizon Aircraft

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in New Horizon Aircraft are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, New Horizon showed solid returns over the last few months and may actually be approaching a breakup point.

Trio Tech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trio Tech International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with New Horizon and Trio Tech

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

The idea behind New Horizon Aircraft and Trio Tech International 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.