Correlation Between New Tech and X Trade

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

By analyzing existing cross correlation between New Tech Capital and X Trade Brokers, you can compare the effects of market volatilities on New Tech and X Trade 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 New Tech with a short position of X Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Tech and X Trade.

Diversification Opportunities for New Tech and X Trade

-0.09

Correlation Coefficient

New Tech  X Trade

Good diversification

The 3 months correlation between New and XTB is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Capital and X Trade Brokers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Trade Brokers and New Tech 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 New Tech Capital are associated (or correlated) with X Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Trade Brokers has no effect on the direction of New Tech i.e., New Tech and X Trade go up and down completely randomly.

Pair Corralation between New Tech and X Trade

Assuming the 90 days trading horizon New Tech Capital is expected to generate 1.69 times more return on investment than X Trade. However, New Tech is 1.69 times more volatile than X Trade Brokers. It trades about 0.03 of its potential returns per unit of risk. X Trade Brokers is currently generating about -0.01 per unit of risk. If you would invest  77.00  in New Tech Capital on December 29, 2024 and sell it today you would earn a total of  2.00  from holding New Tech Capital or generate 2.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

New Tech Capital  vs.  X Trade Brokers

New Tech Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Tech Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, New Tech may actually be approaching a critical reversion point that can send shares even higher in April 2025.

X Trade Brokers

Risk-Adjusted Performance

Very Weak

Over the last 90 days X Trade Brokers has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, X Trade is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with New Tech and X Trade

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

The idea behind New Tech Capital and X Trade Brokers 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.