Correlation Between Jade Leader and Northstar Clean

Can any of the company-specific risk be diversified away by investing in both Jade Leader and Northstar Clean 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 Jade Leader and Northstar Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jade Leader Corp and Northstar Clean Technologies, you can compare the effects of market volatilities on Jade Leader and Northstar Clean 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 Jade Leader with a short position of Northstar Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jade Leader and Northstar Clean.

Diversification Opportunities for Jade Leader and Northstar Clean

-0.8

Correlation Coefficient

Jade Leader  Northstar Clean

Pay attention - limited upside

The 3 months correlation between Jade and Northstar is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Jade Leader Corp and Northstar Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northstar Clean Tech and Jade Leader 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 Jade Leader Corp are associated (or correlated) with Northstar Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northstar Clean Tech has no effect on the direction of Jade Leader i.e., Jade Leader and Northstar Clean go up and down completely randomly.

Pair Corralation between Jade Leader and Northstar Clean

Assuming the 90 days trading horizon Jade Leader Corp is expected to under-perform the Northstar Clean. In addition to that, Jade Leader is 2.13 times more volatile than Northstar Clean Technologies. It trades about -0.03 of its total potential returns per unit of risk. Northstar Clean Technologies is currently generating about 0.24 per unit of volatility. If you would invest  20.00  in Northstar Clean Technologies on September 22, 2024 and sell it today you would earn a total of  15.00  from holding Northstar Clean Technologies or generate 75.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Jade Leader Corp  vs.  Northstar Clean Technologies

Jade Leader Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jade Leader Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Northstar Clean Tech

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Northstar Clean showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jade Leader and Northstar Clean

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

The idea behind Jade Leader Corp and Northstar Clean Technologies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.