Correlation Between Compass and New Concept
Can any of the company-specific risk be diversified away by investing in both Compass and New Concept 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 Compass and New Concept into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass and New Concept Energy, you can compare the effects of market volatilities on Compass and New Concept 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 Compass with a short position of New Concept. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass and New Concept.
Diversification Opportunities for Compass and New Concept
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Compass and New is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Compass and New Concept Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Concept Energy and Compass 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 Compass are associated (or correlated) with New Concept. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Concept Energy has no effect on the direction of Compass i.e., Compass and New Concept go up and down completely randomly.
Pair Corralation between Compass and New Concept
Given the investment horizon of 90 days Compass is expected to under-perform the New Concept. In addition to that, Compass is 1.22 times more volatile than New Concept Energy. It trades about -0.43 of its total potential returns per unit of risk. New Concept Energy is currently generating about 0.09 per unit of volatility. If you would invest 115.00 in New Concept Energy on October 15, 2024 and sell it today you would earn a total of 4.00 from holding New Concept Energy or generate 3.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass vs. New Concept Energy
Performance |
| Timeline |
| Compass |
| New Concept Energy |
Compass and New Concept Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass and New Concept
The main advantage of trading using opposite Compass and New Concept positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass position performs unexpectedly, New Concept 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 Concept will offset losses from the drop in New Concept's long position.The idea behind Compass and New Concept Energy 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.| New Concept vs. Marcus Millichap | New Concept vs. J W Mays | New Concept vs. Frp Holdings Ord | New Concept vs. Maui Land Pineapple |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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