Correlation Between Newretail and ECloudvalley Digital
Can any of the company-specific risk be diversified away by investing in both Newretail and ECloudvalley Digital 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 Newretail and ECloudvalley Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Newretail Co and eCloudvalley Digital Technology, you can compare the effects of market volatilities on Newretail and ECloudvalley Digital 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 Newretail with a short position of ECloudvalley Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newretail and ECloudvalley Digital.
Diversification Opportunities for Newretail and ECloudvalley Digital
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Newretail and ECloudvalley is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Newretail Co and eCloudvalley Digital Technolog in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eCloudvalley Digital and Newretail 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 Newretail Co are associated (or correlated) with ECloudvalley Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eCloudvalley Digital has no effect on the direction of Newretail i.e., Newretail and ECloudvalley Digital go up and down completely randomly.
Pair Corralation between Newretail and ECloudvalley Digital
Assuming the 90 days trading horizon Newretail Co is expected to generate 1.66 times more return on investment than ECloudvalley Digital. However, Newretail is 1.66 times more volatile than eCloudvalley Digital Technology. It trades about 0.09 of its potential returns per unit of risk. eCloudvalley Digital Technology is currently generating about 0.01 per unit of risk. If you would invest 1,080 in Newretail Co on November 8, 2024 and sell it today you would earn a total of 1,240 from holding Newretail Co or generate 114.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newretail Co vs. eCloudvalley Digital Technolog
Performance |
| Timeline |
| Newretail |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| eCloudvalley Digital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Newretail and ECloudvalley Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newretail and ECloudvalley Digital
The main advantage of trading using opposite Newretail and ECloudvalley Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newretail position performs unexpectedly, ECloudvalley Digital 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 ECloudvalley Digital will offset losses from the drop in ECloudvalley Digital's long position.The idea behind Newretail Co and eCloudvalley Digital Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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