Correlation Between Neo Concept and Hanesbrands

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Can any of the company-specific risk be diversified away by investing in both Neo Concept and Hanesbrands 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 Hanesbrands 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 Hanesbrands, you can compare the effects of market volatilities on Neo Concept and Hanesbrands 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 Hanesbrands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neo Concept and Hanesbrands.

Diversification Opportunities for Neo Concept and Hanesbrands

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Neo and Hanesbrands is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Neo Concept International Grou and Hanesbrands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanesbrands 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 Hanesbrands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanesbrands has no effect on the direction of Neo Concept i.e., Neo Concept and Hanesbrands go up and down completely randomly.

Pair Corralation between Neo Concept and Hanesbrands

Considering the 90-day investment horizon Neo Concept International Group is expected to generate 2.44 times more return on investment than Hanesbrands. However, Neo Concept is 2.44 times more volatile than Hanesbrands. It trades about 0.06 of its potential returns per unit of risk. Hanesbrands is currently generating about 0.12 per unit of risk. If you would invest  63.00  in Neo Concept International Group on October 23, 2024 and sell it today you would earn a total of  6.00  from holding Neo Concept International Group or generate 9.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Neo Concept International Grou  vs.  Hanesbrands

 Performance 
       Timeline  
Neo Concept Internat 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Neo Concept International Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal fundamental indicators, Neo Concept demonstrated solid returns over the last few months and may actually be approaching a breakup point.
Hanesbrands 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hanesbrands are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting fundamental drivers, Hanesbrands demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Neo Concept and Hanesbrands Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Neo Concept and Hanesbrands

The main advantage of trading using opposite Neo Concept and Hanesbrands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neo Concept position performs unexpectedly, Hanesbrands 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 Hanesbrands will offset losses from the drop in Hanesbrands' long position.
The idea behind Neo Concept International Group and Hanesbrands 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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