Correlation Between Newtopia and Cogstate

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

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

Diversification Opportunities for Newtopia and Cogstate

-0.52

Correlation Coefficient

Newtopia  Cogstate

Excellent diversification

The 3 months correlation between Newtopia and Cogstate is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Newtopia and Cogstate Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogstate Limited and Newtopia 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 Newtopia are associated (or correlated) with Cogstate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogstate Limited has no effect on the direction of Newtopia i.e., Newtopia and Cogstate go up and down completely randomly.

Pair Corralation between Newtopia and Cogstate

Assuming the 90 days horizon Newtopia is expected to generate 7.19 times more return on investment than Cogstate. However, Newtopia is 7.19 times more volatile than Cogstate Limited. It trades about 0.07 of its potential returns per unit of risk. Cogstate Limited is currently generating about 0.17 per unit of risk. If you would invest  0.14  in Newtopia on December 30, 2024 and sell it today you would lose (0.09) from holding Newtopia or give up 64.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Newtopia  vs.  Cogstate Limited

Newtopia

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Newtopia are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Newtopia reported solid returns over the last few months and may actually be approaching a breakup point.

Cogstate Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Cogstate reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newtopia and Cogstate

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

The idea behind Newtopia and Cogstate 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.