Correlation Between Newcity Public and CSP Steel

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

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

Diversification Opportunities for Newcity Public and CSP Steel

0.83

Correlation Coefficient

Newcity Public  CSP Steel

Very poor diversification

The 3 months correlation between Newcity and CSP is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Newcity Public and CSP Steel Center in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Steel Center and Newcity Public 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 Newcity Public are associated (or correlated) with CSP Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Steel Center has no effect on the direction of Newcity Public i.e., Newcity Public and CSP Steel go up and down completely randomly.

Pair Corralation between Newcity Public and CSP Steel

Assuming the 90 days horizon Newcity Public is expected to under-perform the CSP Steel. In addition to that, Newcity Public is 1.14 times more volatile than CSP Steel Center. It trades about -0.32 of its total potential returns per unit of risk. CSP Steel Center is currently generating about -0.16 per unit of volatility. If you would invest  74.00  in CSP Steel Center on October 6, 2024 and sell it today you would lose (14.00) from holding CSP Steel Center or give up 18.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	97.56%
Values	Daily Returns

Newcity Public  vs.  CSP Steel Center

Newcity Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newcity Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

CSP Steel Center

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSP Steel Center has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Newcity Public and CSP Steel

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

The idea behind Newcity Public and CSP Steel Center 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.