Correlation Between Northstar Clean and Highwood Asset

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

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

Diversification Opportunities for Northstar Clean and Highwood Asset

0.03

Correlation Coefficient

Northstar Clean  Highwood Asset

Significant diversification

The 3 months correlation between Northstar and Highwood is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Northstar Clean Technologies and Highwood Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwood Asset Management and Northstar Clean 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 Northstar Clean Technologies are associated (or correlated) with Highwood Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwood Asset Management has no effect on the direction of Northstar Clean i.e., Northstar Clean and Highwood Asset go up and down completely randomly.

Pair Corralation between Northstar Clean and Highwood Asset

Assuming the 90 days trading horizon Northstar Clean Technologies is expected to generate 1.92 times more return on investment than Highwood Asset. However, Northstar Clean is 1.92 times more volatile than Highwood Asset Management. It trades about 0.2 of its potential returns per unit of risk. Highwood Asset Management is currently generating about 0.02 per unit of risk. If you would invest  21.00  in Northstar Clean Technologies on September 20, 2024 and sell it today you would earn a total of  13.00  from holding Northstar Clean Technologies or generate 61.9% return on investment over 90 days.

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

Northstar Clean Technologies  vs.  Highwood Asset Management

Northstar Clean Tech

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northstar Clean Technologies are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Northstar Clean showed solid returns over the last few months and may actually be approaching a breakup point.

Highwood Asset Management

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highwood Asset Management are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Highwood Asset 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 Northstar Clean and Highwood Asset

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

The idea behind Northstar Clean Technologies and Highwood Asset Management 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.