Correlation Between Identiv and NEW PACIFIC

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

By analyzing existing cross correlation between Identiv and NEW PACIFIC METALS, you can compare the effects of market volatilities on Identiv and NEW PACIFIC 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 Identiv with a short position of NEW PACIFIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Identiv and NEW PACIFIC.

Diversification Opportunities for Identiv and NEW PACIFIC

0.04

Correlation Coefficient

Identiv  NEW PACIFIC

Significant diversification

The 3 months correlation between Identiv and NEW is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Identiv and NEW PACIFIC METALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEW PACIFIC METALS and Identiv 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 Identiv are associated (or correlated) with NEW PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEW PACIFIC METALS has no effect on the direction of Identiv i.e., Identiv and NEW PACIFIC go up and down completely randomly.

Pair Corralation between Identiv and NEW PACIFIC

Assuming the 90 days trading horizon Identiv is expected to under-perform the NEW PACIFIC. But the stock apears to be less risky and, when comparing its historical volatility, Identiv is 1.74 times less risky than NEW PACIFIC. The stock trades about -0.03 of its potential returns per unit of risk. The NEW PACIFIC METALS is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  112.00  in NEW PACIFIC METALS on December 20, 2024 and sell it today you would earn a total of  7.00  from holding NEW PACIFIC METALS or generate 6.25% return on investment over 90 days.

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

Identiv  vs.  NEW PACIFIC METALS

Identiv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Identiv has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NEW PACIFIC METALS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NEW PACIFIC METALS are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, NEW PACIFIC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Identiv and NEW PACIFIC

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

The idea behind Identiv and NEW PACIFIC METALS 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.