Correlation Between New Horizon and United Parcel
Can any of the company-specific risk be diversified away by investing in both New Horizon and United Parcel 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 Horizon and United Parcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Horizon Group and United Parcel Service, you can compare the effects of market volatilities on New Horizon and United Parcel 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 Horizon with a short position of United Parcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Horizon and United Parcel.
Diversification Opportunities for New Horizon and United Parcel
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and United is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding New Horizon Group and United Parcel Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parcel Service and New Horizon 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 Horizon Group are associated (or correlated) with United Parcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parcel Service has no effect on the direction of New Horizon i.e., New Horizon and United Parcel go up and down completely randomly.
Pair Corralation between New Horizon and United Parcel
Assuming the 90 days trading horizon New Horizon Group is expected to generate 4.52 times more return on investment than United Parcel. However, New Horizon is 4.52 times more volatile than United Parcel Service. It trades about 0.42 of its potential returns per unit of risk. United Parcel Service is currently generating about 0.07 per unit of risk. If you would invest 36,990 in New Horizon Group on January 26, 2024 and sell it today you would earn a total of 18,810 from holding New Horizon Group or generate 50.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 76.19% |
| Values | Daily Returns |
New Horizon Group vs. United Parcel Service
Performance |
| Timeline |
| New Horizon Group |
| United Parcel Service |
New Horizon and United Parcel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Horizon and United Parcel
The main advantage of trading using opposite New Horizon and United Parcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Horizon position performs unexpectedly, United Parcel 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 United Parcel will offset losses from the drop in United Parcel's long position.The idea behind New Horizon Group and United Parcel Service 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.| United Parcel vs. GXO Logistics | United Parcel vs. JB Hunt Transport | United Parcel vs. Expeditors International of | United Parcel vs. CH Robinson Worldwide |
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 Stocks Directory module to find actively traded stocks across global markets.
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