Correlation Between 5N Plus and Neo Performance

Can any of the company-specific risk be diversified away by investing in both 5N Plus and Neo Performance 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 5N Plus and Neo Performance into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 5N Plus and Neo Performance Materials, you can compare the effects of market volatilities on 5N Plus and Neo Performance 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 5N Plus with a short position of Neo Performance. Check out your portfolio center. Please also check ongoing floating volatility patterns of 5N Plus and Neo Performance.

Diversification Opportunities for 5N Plus and Neo Performance

0.8

Correlation Coefficient

5N Plus  Neo Performance

Very poor diversification

The 3 months correlation between FPLSF and Neo is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding 5N Plus and Neo Performance Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neo Performance Materials and 5N Plus 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 5N Plus are associated (or correlated) with Neo Performance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neo Performance Materials has no effect on the direction of 5N Plus i.e., 5N Plus and Neo Performance go up and down completely randomly.

Pair Corralation between 5N Plus and Neo Performance

Assuming the 90 days horizon 5N Plus is expected to generate 1.8 times more return on investment than Neo Performance. However, 5N Plus is 1.8 times more volatile than Neo Performance Materials. It trades about 0.21 of its potential returns per unit of risk. Neo Performance Materials is currently generating about 0.27 per unit of risk. If you would invest  607.00  in 5N Plus on May 13, 2025 and sell it today you would earn a total of  502.00  from holding 5N Plus or generate 82.7% return on investment over 90 days.

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

5N Plus  vs.  Neo Performance Materials

5N Plus

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in 5N Plus are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, 5N Plus reported solid returns over the last few months and may actually be approaching a breakup point.

Neo Performance Materials

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neo Performance Materials are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Neo Performance displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 5N Plus and Neo Performance

The main advantage of trading using opposite 5N Plus and Neo Performance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 5N Plus position performs unexpectedly, Neo Performance 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 Neo Performance will offset losses from the drop in Neo Performance's long position.

The idea behind 5N Plus and Neo Performance Materials 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.