Correlation Between Neo Concept and Canoo Holdings

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

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

Diversification Opportunities for Neo Concept and Canoo Holdings

-0.13

Correlation Coefficient

Neo Concept  Canoo Holdings

Good diversification

The 3 months correlation between Neo and Canoo is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Neo Concept International Grou and Canoo Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canoo Holdings and Neo Concept 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 Concept International Group are associated (or correlated) with Canoo Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canoo Holdings has no effect on the direction of Neo Concept i.e., Neo Concept and Canoo Holdings go up and down completely randomly.

Pair Corralation between Neo Concept and Canoo Holdings

Considering the 90-day investment horizon Neo Concept International Group is expected to generate 0.25 times more return on investment than Canoo Holdings. However, Neo Concept International Group is 4.03 times less risky than Canoo Holdings. It trades about -0.01 of its potential returns per unit of risk. Canoo Holdings is currently generating about -0.16 per unit of risk. If you would invest  52.00  in Neo Concept International Group on December 27, 2024 and sell it today you would lose (7.00) from holding Neo Concept International Group or give up 13.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	35.0%
Values	Daily Returns

Neo Concept International Grou  vs.  Canoo Holdings

Neo Concept Internat

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neo Concept International Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Neo Concept is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Canoo Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Canoo Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Neo Concept and Canoo Holdings

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

The idea behind Neo Concept International Group and Canoo Holdings 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.