Correlation Between Newegg Commerce and Powell Max

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

By analyzing existing cross correlation between Newegg Commerce and Powell Max Limited, you can compare the effects of market volatilities on Newegg Commerce and Powell Max 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 Newegg Commerce with a short position of Powell Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newegg Commerce and Powell Max.

Diversification Opportunities for Newegg Commerce and Powell Max

0.44

Correlation Coefficient

Newegg Commerce  Powell Max

Very weak diversification

The 3 months correlation between Newegg and Powell is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Newegg Commerce and Powell Max Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Powell Max Limited and Newegg Commerce 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 Newegg Commerce are associated (or correlated) with Powell Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Powell Max Limited has no effect on the direction of Newegg Commerce i.e., Newegg Commerce and Powell Max go up and down completely randomly.

Pair Corralation between Newegg Commerce and Powell Max

Given the investment horizon of 90 days Newegg Commerce is expected to under-perform the Powell Max. But the stock apears to be less risky and, when comparing its historical volatility, Newegg Commerce is 1.92 times less risky than Powell Max. The stock trades about -0.26 of its potential returns per unit of risk. The Powell Max Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  324.00  in Powell Max Limited on September 19, 2024 and sell it today you would lose (35.00) from holding Powell Max Limited or give up 10.8% of portfolio value over 90 days.

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

Newegg Commerce  vs.  Powell Max Limited

Newegg Commerce

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newegg Commerce has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Powell Max Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powell Max Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Newegg Commerce and Powell Max

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

The idea behind Newegg Commerce and Powell Max Limited 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.