Correlation Between J W and New Concept

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

By analyzing existing cross correlation between J W Mays and New Concept Energy, you can compare the effects of market volatilities on J W and New Concept 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 J W with a short position of New Concept. Check out your portfolio center. Please also check ongoing floating volatility patterns of J W and New Concept.

Diversification Opportunities for J W and New Concept

-0.06

Correlation Coefficient

J W  New Concept

Good diversification

The 3 months correlation between MAYS and New is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding J W Mays and New Concept Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Concept Energy and J W 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 J W Mays are associated (or correlated) with New Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Concept Energy has no effect on the direction of J W i.e., J W and New Concept go up and down completely randomly.

Pair Corralation between J W and New Concept

Given the investment horizon of 90 days J W is expected to generate 3.6 times less return on investment than New Concept. But when comparing it to its historical volatility, J W Mays is 1.45 times less risky than New Concept. It trades about 0.06 of its potential returns per unit of risk. New Concept Energy is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  118.00  in New Concept Energy on October 12, 2024 and sell it today you would earn a total of  7.00  from holding New Concept Energy or generate 5.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

J W Mays  vs.  New Concept Energy

J W Mays

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in J W Mays are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, J W is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

New Concept Energy

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Concept Energy are ranked lower than 3 (%) 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.

Pair Trading with J W and New Concept

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

The idea behind J W Mays and New Concept Energy 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..