Correlation Between 180 Degree and Princeton Capital

Can any of the company-specific risk be diversified away by investing in both 180 Degree and Princeton Capital 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 180 Degree and Princeton Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 180 Degree Capital and Princeton Capital, you can compare the effects of market volatilities on 180 Degree and Princeton Capital 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 180 Degree with a short position of Princeton Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of 180 Degree and Princeton Capital.

Diversification Opportunities for 180 Degree and Princeton Capital

-0.16

Correlation Coefficient

180 Degree  Princeton Capital

Good diversification

The 3 months correlation between 180 and Princeton is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding 180 Degree Capital and Princeton Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Princeton Capital and 180 Degree 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 180 Degree Capital are associated (or correlated) with Princeton Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Princeton Capital has no effect on the direction of 180 Degree i.e., 180 Degree and Princeton Capital go up and down completely randomly.

Pair Corralation between 180 Degree and Princeton Capital

Given the investment horizon of 90 days 180 Degree Capital is expected to under-perform the Princeton Capital. But the stock apears to be less risky and, when comparing its historical volatility, 180 Degree Capital is 6.71 times less risky than Princeton Capital. The stock trades about -0.04 of its potential returns per unit of risk. The Princeton Capital is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  35.00  in Princeton Capital on September 14, 2024 and sell it today you would lose (23.00) from holding Princeton Capital or give up 65.71% of portfolio value over 90 days.

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

180 Degree Capital  vs.  Princeton Capital

180 Degree Capital

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 180 Degree Capital are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, 180 Degree displayed solid returns over the last few months and may actually be approaching a breakup point.

Princeton Capital

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Princeton Capital are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Princeton Capital exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 180 Degree and Princeton Capital

The main advantage of trading using opposite 180 Degree and Princeton Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 180 Degree position performs unexpectedly, Princeton Capital 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 Princeton Capital will offset losses from the drop in Princeton Capital's long position.

The idea behind 180 Degree Capital and Princeton Capital 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.