Correlation Between New Tech and Carlson Investments

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

By analyzing existing cross correlation between New Tech Venture and Carlson Investments SA, you can compare the effects of market volatilities on New Tech and Carlson Investments 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 Carlson Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Tech and Carlson Investments.

Diversification Opportunities for New Tech and Carlson Investments

0.24

Correlation Coefficient

New Tech  Carlson Investments

Modest diversification

The 3 months correlation between New and Carlson is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Venture and Carlson Investments SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carlson Investments 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 Venture are associated (or correlated) with Carlson Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carlson Investments has no effect on the direction of New Tech i.e., New Tech and Carlson Investments go up and down completely randomly.

Pair Corralation between New Tech and Carlson Investments

Assuming the 90 days trading horizon New Tech Venture is expected to under-perform the Carlson Investments. In addition to that, New Tech is 1.01 times more volatile than Carlson Investments SA. It trades about -0.14 of its total potential returns per unit of risk. Carlson Investments SA is currently generating about -0.07 per unit of volatility. If you would invest  530.00  in Carlson Investments SA on September 2, 2024 and sell it today you would lose (83.00) from holding Carlson Investments SA or give up 15.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	63.49%
Values	Daily Returns

New Tech Venture  vs.  Carlson Investments SA

New Tech Venture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Tech Venture has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Carlson Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlson Investments SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with New Tech and Carlson Investments

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

The idea behind New Tech Venture and Carlson Investments SA 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..