Correlation Between Mitesco and Newtopia

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

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

Diversification Opportunities for Mitesco and Newtopia

-0.03

Correlation Coefficient

Mitesco  Newtopia

Good diversification

The 3 months correlation between Mitesco and Newtopia is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Mitesco and Newtopia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtopia and Mitesco 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 Mitesco are associated (or correlated) with Newtopia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtopia has no effect on the direction of Mitesco i.e., Mitesco and Newtopia go up and down completely randomly.

Pair Corralation between Mitesco and Newtopia

Given the investment horizon of 90 days Mitesco is expected to generate 0.82 times more return on investment than Newtopia. However, Mitesco is 1.21 times less risky than Newtopia. It trades about 0.1 of its potential returns per unit of risk. Newtopia is currently generating about 0.07 per unit of risk. If you would invest  40.00  in Mitesco on December 30, 2024 and sell it today you would earn a total of  11.00  from holding Mitesco or generate 27.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.38%
Values	Daily Returns

Mitesco  vs.  Newtopia

Mitesco

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mitesco are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal basic indicators, Mitesco demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Newtopia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Newtopia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Newtopia reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mitesco and Newtopia

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

The idea behind Mitesco and Newtopia 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.