Correlation Between Northstar Clean and South Pacific
Can any of the company-specific risk be diversified away by investing in both Northstar Clean and South Pacific 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 South Pacific 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 South Pacific Metals, you can compare the effects of market volatilities on Northstar Clean and South Pacific 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 South Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northstar Clean and South Pacific.
Diversification Opportunities for Northstar Clean and South Pacific
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Northstar and South is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and South Pacific Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Pacific Metals 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 South Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Pacific Metals has no effect on the direction of Northstar Clean i.e., Northstar Clean and South Pacific go up and down completely randomly.
Pair Corralation between Northstar Clean and South Pacific
Assuming the 90 days trading horizon Northstar Clean Technologies is expected to generate 0.69 times more return on investment than South Pacific. However, Northstar Clean Technologies is 1.46 times less risky than South Pacific. It trades about 0.14 of its potential returns per unit of risk. South Pacific Metals is currently generating about 0.06 per unit of risk. If you would invest 20.00 in Northstar Clean Technologies on October 22, 2024 and sell it today you would earn a total of 19.00 from holding Northstar Clean Technologies or generate 95.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northstar Clean Technologies vs. South Pacific Metals
Performance |
| Timeline |
| Northstar Clean Tech |
| South Pacific Metals |
Northstar Clean and South Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northstar Clean and South Pacific
The main advantage of trading using opposite Northstar Clean and South Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northstar Clean position performs unexpectedly, South Pacific 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 South Pacific will offset losses from the drop in South Pacific's long position.The idea behind Northstar Clean Technologies and South Pacific Metals 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.| South Pacific vs. Thunderbird Entertainment Group | South Pacific vs. Hemisphere Energy | South Pacific vs. TGS Esports | South Pacific vs. Sangoma Technologies Corp |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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