Correlation Between Neo Battery and Wallbridge Mining

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

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

Diversification Opportunities for Neo Battery and Wallbridge Mining

0.43

Correlation Coefficient

Neo Battery  Wallbridge Mining

Very weak diversification

The 3 months correlation between Neo and Wallbridge is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Neo Battery Materials and Wallbridge Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wallbridge Mining and Neo Battery 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 Neo Battery Materials are associated (or correlated) with Wallbridge Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wallbridge Mining has no effect on the direction of Neo Battery i.e., Neo Battery and Wallbridge Mining go up and down completely randomly.

Pair Corralation between Neo Battery and Wallbridge Mining

Assuming the 90 days horizon Neo Battery Materials is expected to generate 5.03 times more return on investment than Wallbridge Mining. However, Neo Battery is 5.03 times more volatile than Wallbridge Mining. It trades about 0.09 of its potential returns per unit of risk. Wallbridge Mining is currently generating about 0.05 per unit of risk. If you would invest  61.00  in Neo Battery Materials on December 29, 2024 and sell it today you would lose (9.00) from holding Neo Battery Materials or give up 14.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.83%
Values	Daily Returns

Neo Battery Materials  vs.  Wallbridge Mining

Neo Battery Materials

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neo Battery Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Neo Battery reported solid returns over the last few months and may actually be approaching a breakup point.

Wallbridge Mining

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Neo Battery and Wallbridge Mining

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

The idea behind Neo Battery Materials and Wallbridge Mining 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.