Correlation Between Flagship Investments and New Hope

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

Diversification Opportunities for Flagship Investments and New Hope

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between Flagship and New is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope and Flagship Investments 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 Flagship Investments are associated (or correlated) with New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope has no effect on the direction of Flagship Investments i.e., Flagship Investments and New Hope go up and down completely randomly.

Pair Corralation between Flagship Investments and New Hope

Assuming the 90 days trading horizon Flagship Investments is expected to generate 0.71 times more return on investment than New Hope. However, Flagship Investments is 1.42 times less risky than New Hope. It trades about 0.14 of its potential returns per unit of risk. New Hope is currently generating about -0.2 per unit of risk. If you would invest  181.00  in Flagship Investments on November 30, 2023 and sell it today you would earn a total of  9.00  from holding Flagship Investments or generate 4.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.65%
ValuesDaily Returns

Flagship Investments  vs.  New Hope

 Performance 
       Timeline  
Flagship Investments 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Flagship Investments are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Flagship Investments unveiled solid returns over the last few months and may actually be approaching a breakup point.
New Hope 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days New Hope has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Flagship Investments and New Hope Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Flagship Investments and New Hope

The main advantage of trading using opposite Flagship Investments and New Hope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments position performs unexpectedly, New Hope 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 Hope will offset losses from the drop in New Hope's long position.
The idea behind Flagship Investments and New Hope 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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