Correlation Between Newron Sport and TransAKT

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

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

Diversification Opportunities for Newron Sport and TransAKT

0.25

Correlation Coefficient

Newron Sport  TransAKT

Modest diversification

The 3 months correlation between Newron and TransAKT is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Newron Sport and TransAKT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAKT and Newron Sport 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 Newron Sport are associated (or correlated) with TransAKT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAKT has no effect on the direction of Newron Sport i.e., Newron Sport and TransAKT go up and down completely randomly.

Pair Corralation between Newron Sport and TransAKT

Given the investment horizon of 90 days Newron Sport is expected to generate 23.44 times less return on investment than TransAKT. But when comparing it to its historical volatility, Newron Sport is 9.21 times less risky than TransAKT. It trades about 0.06 of its potential returns per unit of risk. TransAKT is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2.77  in TransAKT on December 1, 2024 and sell it today you would lose (0.87) from holding TransAKT or give up 31.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Newron Sport  vs.  TransAKT

Newron Sport

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Newron Sport are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Newron Sport unveiled solid returns over the last few months and may actually be approaching a breakup point.

TransAKT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Newron Sport and TransAKT

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

The idea behind Newron Sport and TransAKT 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.