Correlation Between Pan Asia and Newcity Public

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

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

Diversification Opportunities for Pan Asia and Newcity Public

0.27

Correlation Coefficient

Pan Asia  Newcity Public

Modest diversification

The 3 months correlation between Pan and Newcity is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pan Asia Footwear and Newcity Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcity Public and Pan Asia 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 Pan Asia Footwear are associated (or correlated) with Newcity Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newcity Public has no effect on the direction of Pan Asia i.e., Pan Asia and Newcity Public go up and down completely randomly.

Pair Corralation between Pan Asia and Newcity Public

Assuming the 90 days trading horizon Pan Asia Footwear is expected to under-perform the Newcity Public. But the stock apears to be less risky and, when comparing its historical volatility, Pan Asia Footwear is 1.55 times less risky than Newcity Public. The stock trades about -0.14 of its potential returns per unit of risk. The Newcity Public is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  236.00  in Newcity Public on December 21, 2024 and sell it today you would lose (4.00) from holding Newcity Public or give up 1.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Pan Asia Footwear  vs.  Newcity Public

Pan Asia Footwear

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pan Asia Footwear has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Newcity Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newcity Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental drivers, Newcity Public is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Pan Asia and Newcity Public

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

The idea behind Pan Asia Footwear and Newcity Public 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.