Correlation Between Peoples Garment and Newcity Public

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

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

Diversification Opportunities for Peoples Garment and Newcity Public

0.4

Correlation Coefficient

Peoples Garment  Newcity Public

Very weak diversification

The 3 months correlation between Peoples and Newcity is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Peoples Garment Public and Newcity Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newcity Public and Peoples Garment 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 Peoples Garment Public 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 Peoples Garment i.e., Peoples Garment and Newcity Public go up and down completely randomly.

Pair Corralation between Peoples Garment and Newcity Public

Assuming the 90 days horizon Peoples Garment Public is expected to generate 0.22 times more return on investment than Newcity Public. However, Peoples Garment Public is 4.55 times less risky than Newcity Public. It trades about 0.0 of its potential returns per unit of risk. Newcity Public is currently generating about -0.11 per unit of risk. If you would invest  895.00  in Peoples Garment Public on September 15, 2024 and sell it today you would earn a total of  0.00  from holding Peoples Garment Public or generate 0.0% return on investment over 90 days.

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

Peoples Garment Public  vs.  Newcity Public

Peoples Garment Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Peoples Garment Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Peoples Garment is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Newcity Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newcity Public 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 fundamental drivers remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Peoples Garment and Newcity Public

The main advantage of trading using opposite Peoples Garment and Newcity Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Peoples Garment 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 Peoples Garment Public 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.