Correlation Between Newcity Public and OCC Public

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

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

Diversification Opportunities for Newcity Public and OCC Public

-0.03

Correlation Coefficient

Newcity Public  OCC Public

Good diversification

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

Pair Corralation between Newcity Public and OCC Public

Assuming the 90 days horizon Newcity Public is expected to generate 2.18 times more return on investment than OCC Public. However, Newcity Public is 2.18 times more volatile than OCC Public. It trades about 0.02 of its potential returns per unit of risk. OCC Public is currently generating about 0.0 per unit of risk. If you would invest  234.00  in Newcity Public on December 28, 2024 and sell it today you would earn a total of  2.00  from holding Newcity Public or generate 0.85% return on investment over 90 days.

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

Newcity Public  vs.  OCC Public

Newcity Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newcity Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Newcity Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

OCC Public

Risk-Adjusted Performance

Weak

Over the last 90 days OCC Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, OCC Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Newcity Public and OCC Public

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

The idea behind Newcity Public and OCC Public 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 Transaction History module to view history of all your transactions and understand their impact on performance.