Correlation Between NewHold Investment and Brilliant Acquisition

Can any of the company-specific risk be diversified away by investing in both NewHold Investment and Brilliant Acquisition 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 NewHold Investment and Brilliant Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NewHold Investment Corp and Brilliant Acquisition, you can compare the effects of market volatilities on NewHold Investment and Brilliant Acquisition 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 NewHold Investment with a short position of Brilliant Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of NewHold Investment and Brilliant Acquisition.

Diversification Opportunities for NewHold Investment and Brilliant Acquisition

-0.3

Correlation Coefficient

NewHold Investment  Brilliant Acquisition

Very good diversification

The 3 months correlation between NewHold and Brilliant is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NewHold Investment Corp and Brilliant Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brilliant Acquisition and NewHold Investment 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 NewHold Investment Corp are associated (or correlated) with Brilliant Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brilliant Acquisition has no effect on the direction of NewHold Investment i.e., NewHold Investment and Brilliant Acquisition go up and down completely randomly.

Pair Corralation between NewHold Investment and Brilliant Acquisition

If you would invest  4.89  in Brilliant Acquisition on September 8, 2024 and sell it today you would earn a total of  0.00  from holding Brilliant Acquisition or generate 0.0% return on investment over 90 days.

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

NewHold Investment Corp  vs.  Brilliant Acquisition

NewHold Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NewHold Investment Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, NewHold Investment is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Brilliant Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brilliant Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, Brilliant Acquisition is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with NewHold Investment and Brilliant Acquisition

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

The idea behind NewHold Investment Corp and Brilliant Acquisition 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.