Correlation Between Paltalk and Newpark Resources

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

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

Diversification Opportunities for Paltalk and Newpark Resources

-0.28

Correlation Coefficient

Paltalk  Newpark Resources

Very good diversification

The 3 months correlation between Paltalk and Newpark is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Paltalk and Newpark Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newpark Resources and Paltalk 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 Paltalk are associated (or correlated) with Newpark Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newpark Resources has no effect on the direction of Paltalk i.e., Paltalk and Newpark Resources go up and down completely randomly.

Pair Corralation between Paltalk and Newpark Resources

Given the investment horizon of 90 days Paltalk is expected to under-perform the Newpark Resources. In addition to that, Paltalk is 1.58 times more volatile than Newpark Resources. It trades about -0.24 of its total potential returns per unit of risk. Newpark Resources is currently generating about -0.26 per unit of volatility. If you would invest  806.00  in Newpark Resources on September 24, 2024 and sell it today you would lose (81.00) from holding Newpark Resources or give up 10.05% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Paltalk  vs.  Newpark Resources

Paltalk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Paltalk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Newpark Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Newpark Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Newpark Resources 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 Paltalk and Newpark Resources

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

The idea behind Paltalk and Newpark Resources 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.