Correlation Between New Residential and GLG LIFE

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Can any of the company-specific risk be diversified away by investing in both New Residential and GLG LIFE 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 New Residential and GLG LIFE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and GLG LIFE TECH, you can compare the effects of market volatilities on New Residential and GLG LIFE 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 New Residential with a short position of GLG LIFE. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and GLG LIFE.

Diversification Opportunities for New Residential and GLG LIFE

0.0
  Correlation Coefficient

Pay attention - limited upside

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

Pair Corralation between New Residential and GLG LIFE

If you would invest  1,030  in New Residential Investment on October 14, 2024 and sell it today you would earn a total of  31.00  from holding New Residential Investment or generate 3.01% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy94.12%
ValuesDaily Returns

New Residential Investment  vs.  GLG LIFE TECH

 Performance 
       Timeline  
New Residential Inve 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in New Residential Investment are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, New Residential may actually be approaching a critical reversion point that can send shares even higher in February 2025.
GLG LIFE TECH 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days GLG LIFE TECH has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, GLG LIFE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

New Residential and GLG LIFE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with New Residential and GLG LIFE

The main advantage of trading using opposite New Residential and GLG LIFE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential position performs unexpectedly, GLG LIFE 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 GLG LIFE will offset losses from the drop in GLG LIFE's long position.
The idea behind New Residential Investment and GLG LIFE TECH 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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