Correlation Between Stone Harbor and New Germany

Can any of the company-specific risk be diversified away by investing in both Stone Harbor and New Germany 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 Stone Harbor and New Germany into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Stone Harbor Emerging and New Germany Closed, you can compare the effects of market volatilities on Stone Harbor and New Germany 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 Stone Harbor with a short position of New Germany. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stone Harbor and New Germany.

Diversification Opportunities for Stone Harbor and New Germany

-0.77

Correlation Coefficient

Stone Harbor  New Germany

Pay attention - limited upside

The 3 months correlation between Stone and New is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Stone Harbor Emerging and New Germany Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Germany Closed and Stone Harbor 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 Stone Harbor Emerging are associated (or correlated) with New Germany. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Germany Closed has no effect on the direction of Stone Harbor i.e., Stone Harbor and New Germany go up and down completely randomly.

Pair Corralation between Stone Harbor and New Germany

If you would invest  547.00  in Stone Harbor Emerging on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Stone Harbor Emerging or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Stone Harbor Emerging  vs.  New Germany Closed

Stone Harbor Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stone Harbor Emerging has generated negative risk-adjusted returns adding no value to fund investors. Despite fairly strong fundamental indicators, Stone Harbor is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

New Germany Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Germany Closed has generated negative risk-adjusted returns adding no value to fund investors. Despite nearly stable technical and fundamental indicators, New Germany is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Stone Harbor and New Germany

The main advantage of trading using opposite Stone Harbor and New Germany positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Harbor position performs unexpectedly, New Germany 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 Germany will offset losses from the drop in New Germany's long position.

The idea behind Stone Harbor Emerging and New Germany Closed 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.