Correlation Between Northstar Clean and Loop Media

Can any of the company-specific risk be diversified away by investing in both Northstar Clean and Loop Media 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 Loop Media 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 Loop Media, you can compare the effects of market volatilities on Northstar Clean and Loop Media 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 Loop Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and Loop Media.

Diversification Opportunities for Northstar Clean and Loop Media

-0.77

Correlation Coefficient

Northstar Clean  Loop Media

Pay attention - limited upside

The 3 months correlation between Northstar and Loop is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and Loop Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loop Media 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 Loop Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loop Media has no effect on the direction of Northstar Clean i.e., Northstar Clean and Loop Media go up and down completely randomly.

Pair Corralation between Northstar Clean and Loop Media

Assuming the 90 days horizon Northstar Clean Technologies is expected to generate 0.58 times more return on investment than Loop Media. However, Northstar Clean Technologies is 1.74 times less risky than Loop Media. It trades about 0.05 of its potential returns per unit of risk. Loop Media is currently generating about -0.07 per unit of risk. If you would invest  11.00  in Northstar Clean Technologies on September 12, 2024 and sell it today you would earn a total of  13.00  from holding Northstar Clean Technologies or generate 118.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	83.4%
Values	Daily Returns

Northstar Clean Technologies  vs.  Loop Media

Northstar Clean Tech

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Northstar Clean reported solid returns over the last few months and may actually be approaching a breakup point.

Loop Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Loop Media has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Loop Media is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Northstar Clean and Loop Media

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

The idea behind Northstar Clean Technologies and Loop Media 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 Transaction History module to view history of all your transactions and understand their impact on performance.