Correlation Between Neo Concept and ReTo Eco

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

Diversification Opportunities for Neo Concept and ReTo Eco

0.56

Correlation Coefficient

Neo Concept  ReTo Eco

Very weak diversification

The 3 months correlation between Neo and ReTo is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Neo Concept International Grou and ReTo Eco Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReTo Eco Solutions 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 ReTo Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReTo Eco Solutions has no effect on the direction of Neo Concept i.e., Neo Concept and ReTo Eco go up and down completely randomly.

Pair Corralation between Neo Concept and ReTo Eco

Considering the 90-day investment horizon Neo Concept International Group is expected to generate 0.37 times more return on investment than ReTo Eco. However, Neo Concept International Group is 2.71 times less risky than ReTo Eco. It trades about -0.02 of its potential returns per unit of risk. ReTo Eco Solutions is currently generating about -0.02 per unit of risk. If you would invest  53.00  in Neo Concept International Group on December 25, 2024 and sell it today you would lose (8.00) from holding Neo Concept International Group or give up 15.09% of portfolio value over 90 days.

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

Neo Concept International Grou  vs.  ReTo Eco Solutions

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 latest weak performance, the Stock's fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

ReTo Eco Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Neo Concept and ReTo Eco

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

The idea behind Neo Concept International Group and ReTo Eco Solutions 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.