Correlation Between Northstar Clean and FP Newspapers

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

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

Diversification Opportunities for Northstar Clean and FP Newspapers

0.47

Correlation Coefficient

Northstar Clean  FP Newspapers

Very weak diversification

The 3 months correlation between Northstar and FP Newspapers is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and FP Newspapers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FP Newspapers and Northstar Clean 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 Northstar Clean Technologies are associated (or correlated) with FP Newspapers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FP Newspapers has no effect on the direction of Northstar Clean i.e., Northstar Clean and FP Newspapers go up and down completely randomly.

Pair Corralation between Northstar Clean and FP Newspapers

Assuming the 90 days trading horizon Northstar Clean Technologies is expected to generate 1.98 times more return on investment than FP Newspapers. However, Northstar Clean is 1.98 times more volatile than FP Newspapers. It trades about 0.22 of its potential returns per unit of risk. FP Newspapers is currently generating about 0.1 per unit of risk. If you would invest  23.00  in Northstar Clean Technologies on October 20, 2024 and sell it today you would earn a total of  16.00  from holding Northstar Clean Technologies or generate 69.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Northstar Clean Technologies  vs.  FP Newspapers

Northstar Clean Tech

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Northstar Clean showed solid returns over the last few months and may actually be approaching a breakup point.

FP Newspapers

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FP Newspapers are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, FP Newspapers showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northstar Clean and FP Newspapers

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

The idea behind Northstar Clean Technologies and FP Newspapers 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.