Correlation Between Newcity Public and Ocean Glass

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

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

Diversification Opportunities for Newcity Public and Ocean Glass

0.66

Correlation Coefficient

Newcity Public  Ocean Glass

Poor diversification

The 3 months correlation between Newcity and Ocean is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Newcity Public and Ocean Glass Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Glass 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 Ocean Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Glass Public has no effect on the direction of Newcity Public i.e., Newcity Public and Ocean Glass go up and down completely randomly.

Pair Corralation between Newcity Public and Ocean Glass

Assuming the 90 days horizon Newcity Public is expected to under-perform the Ocean Glass. In addition to that, Newcity Public is 2.22 times more volatile than Ocean Glass Public. It trades about -0.11 of its total potential returns per unit of risk. Ocean Glass Public is currently generating about -0.25 per unit of volatility. If you would invest  2,050  in Ocean Glass Public on September 15, 2024 and sell it today you would lose (150.00) from holding Ocean Glass Public or give up 7.32% of portfolio value over 90 days.

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

Newcity Public  vs.  Ocean Glass Public

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ocean Glass Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Glass Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Newcity Public and Ocean Glass

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

The idea behind Newcity Public and Ocean Glass 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.