Correlation Between ROC Energy and New Generation

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

By analyzing existing cross correlation between ROC Energy Acquisition and New Generation Consumer, you can compare the effects of market volatilities on ROC Energy and New Generation 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 ROC Energy with a short position of New Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of ROC Energy and New Generation.

Diversification Opportunities for ROC Energy and New Generation

0.0

Correlation Coefficient

ROC Energy  New Generation

Pay attention - limited upside

The 3 months correlation between ROC and New is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding ROC Energy Acquisition and New Generation Consumer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Generation Consumer and ROC Energy 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 ROC Energy Acquisition are associated (or correlated) with New Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Generation Consumer has no effect on the direction of ROC Energy i.e., ROC Energy and New Generation go up and down completely randomly.

Pair Corralation between ROC Energy and New Generation

If you would invest  0.07  in New Generation Consumer on December 22, 2024 and sell it today you would lose (0.02) from holding New Generation Consumer or give up 28.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

ROC Energy Acquisition  vs.  New Generation Consumer

ROC Energy Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days ROC Energy Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ROC Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

New Generation Consumer

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in New Generation Consumer are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, New Generation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ROC Energy and New Generation

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

The idea behind ROC Energy Acquisition and New Generation Consumer 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.