Correlation Between Now Corp and Concepcion Industrial

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

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

Diversification Opportunities for Now Corp and Concepcion Industrial

0.62

Correlation Coefficient

Now Corp  Concepcion Industrial

Poor diversification

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

Pair Corralation between Now Corp and Concepcion Industrial

Assuming the 90 days trading horizon Now Corp is expected to generate 1.45 times less return on investment than Concepcion Industrial. In addition to that, Now Corp is 2.63 times more volatile than Concepcion Industrial Corp. It trades about 0.01 of its total potential returns per unit of risk. Concepcion Industrial Corp is currently generating about 0.06 per unit of volatility. If you would invest  1,342  in Concepcion Industrial Corp on October 6, 2024 and sell it today you would earn a total of  12.00  from holding Concepcion Industrial Corp or generate 0.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	88.24%
Values	Daily Returns

Now Corp  vs.  Concepcion Industrial Corp

Now Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Now Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Concepcion Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Concepcion Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Concepcion Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Now Corp and Concepcion Industrial

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

The idea behind Now Corp and Concepcion Industrial Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.